Section 2. Worldwide IC Vendors

2 WORLDWIDE IC VENDORS

OVERVIEW

Figure 2-1 provides a breakdown of worldwide IC sales by North American, Japanese, European, and Rest-of-World (ROW) companies for 1975-1995. As can be seen, sales by North American companies were overwhelmingly dominant in the mid-1970’s. However, by the mid-1980’s the majority of the world’s IC sales were about evenly split between North American and Japanese companies. By 1990 the Japanese had increased their share of worldwide IC sales to 48 percent, but in 1992 Japan’s economy weakened causing their share to begin falling. A persistent economic slump in the following years coupled with the Koreans’ success in the MOS memory market caused the Japanese share to continue falling.

70% 70 63% 60

50 48% 46% 43% 42% 40 36% 36% Percent

30 27%

20 18% 15%** 10% 9% 10% 10 8% 6% 7%

2% 2% 2%

0 1975 1980 1985 1990 1995

Year

= North American Companies = European Companies = Japanese Companies = ROW Companies ** Korean companies' share is 10 percentage points.

Source: ICE, "Status 1996" 13743R

Figure 2-1. Marketshares of Worldwide IC Sales ($)

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-1 Worldwide IC Vendors

For the past 21 years European companies have continued to represent between seven and ten percent of worldwide IC sales. Meanwhile, the ROW companies have increase their share from about one percent to 15 percent. 1992 was the first year that the ROW IC companies (primarily Korean and Taiwanese) sold more ICs (in dollars) than the indigenous European companies! In 1995, sales by ROW IC companies were more than double those of European IC companies.

A ranking for the world’s top ten merchant semiconductor sales leaders in 1995 is given in Figure 2-2. These companies grew by an average of 37 percent during the year, and together, they held roughly 58 percent of the overall semiconductor market.

Rank 1995 Total 1995 IC 1995 1995/1994 Company Semi Sales Sales ($M) Discrete Percent 1995 1994 1992 ($M) Sales ($M) Change

1 1 3 Intel 13,590 13,590 — 38 2 2 1 NEC 12,275 11,045 1,230 39 3 3 2 Toshiba 10,000 8,100 1,900 24 4 5 5 Hitachi 9,825 8,630 1,195 41 5 4 4 Motorola 8,932 7,196 1,736 24 6 7 11 Samsung 8,416 8,182 234 68 7 6 6 TI 7,750 7,700 50 40 8 N/A N/A IBM Microelectronics 5,705 5,705 — 25 9 8 8 Mitsubishi 5,510 4,690 820 39 10 9 7 Fujitsu 4,440 4,010 430 33 — — — Total 86,443 78,848 7,595 37

Source: ICE, "Status 1996" 18072J

Figure 2-2. Worldwide Top Ten Merchant Semiconductor Sales Leaders

The 1995 top fifteen world integrated circuit sales leaders are listed in Figure 2-3. The most notable aspect concerning this list is the fact that Samsung, LG Semicon, Hyundai, and Micron, each a major non-Japanese DRAM supplier, are all quickly moving up in the ranks.

NORTH AMERICAN MERCHANT IC VENDORS

Provided in Figure 2-4 is a listing of those North American merchant IC vendors with sales of at least $25 million in 1995. The figure includes sales for both IC manufacturers and fabless IC suppliers. For the manufacturers, IC “sales” include all revenue from ICs produced by their own fabrication facilities and by external foundries. Also, sales by the major ASIC firms (e.g., Xilinx, Altera, and LSI Logic) include revenue from sales of software design tools.

2-2 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

Rank 1995 Total 1995/1994 Company IC Sales Percent 1995 1994 1992 ($M) Change

1 1 2 Intel 13,590 38 2 2 1 NEC 11,045 41 3 4 4 Hitachi 8,630 45 4 7 9 Samsung 8,182 70 5 3 3 Toshiba 8,100 26 6 6 6 TI 7,700 40 7 5 5 Motorola 7,196 23 8 N/A N/A IBM Microelectronics 5,705 25 9 8 8 Mitsubishi 4,690 43 10 9 7 Fujitsu 4,010 35 11 15 21 LG Semicon 3,300 83 12 17 27 Hyundai 3,000 71 13 10 14 SGS-Thomson 2,947 34 14 13 13 Philips 2,850 35 15 19 26 Micron 2,705 72 — — — Total 93,650 41

Source: ICE, "Status 1996" 20458

Figure 2-3. Worldwide Top Fifteen Merchant IC Sales Leaders

On average, sales for IC vendors headquartered in North America grew 34 percent in 1995 versus 27 percent in 1994. Of the 85 companies listed in the figure, only a dozen or so are estimated to have experienced anything less than double digit growth in 1995.

Those companies with the most dramatic sales gains for the year are shown in Figure 2-5. Note that the list includes only those companies with sales of more than $100 million thereby making the growth rates more comparable. A close look at the figure reveals two interesting points. First, half of the companies listed in the figure are involved in graphics and/or multimedia-related ICs; and second, two-thirds of them are fabless.

Figure 2-6 lists selected North American IC companies and the end-user markets they rely on. Those companies that are heavily dependent on the computer industry have benefited from a booming market for PCs. At the same time, however, they are more susceptible to downturns. Those companies that sell to a balance of computer, communications, and consumer product manufacturers are generally more resilient to cyclical fluctuations.

Excluding the effects of a change in the classification of Cirrus Logic from fabless supplier in 1994 to manufacturer in 1995, sales for the region’s fabless IC companies grew by more than 50 percent in 1995. With the reclassification taken into account, the growth in sales for the year drops to 20 percent.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-3 Worldwide IC Vendors

1994 1995/1994 1995 (EST) Company Fabless1 MOS Bipolar IC TotalPercent Change MOS Bipolar IC Total ACC Microelectronics x 25 — 25 20 30 — 30 Actel x 76 — 76 42 108 — 108 Allegro MicroSystems2 40 99 139 23 47 124 171 Alliance Semiconductor x 95 — 95 174 260 — 260 Altera x 199 — 199 101 400 — 400 AMCC2 11 36 47 11 15 37 52 AMD 1,993 142 2,135 11 2,260 120 2,380 AMI 171 — 171 23 210 — 210 Anadigics3 35 — 35 51 53 — 53 Analog Devices2 365 350 715 29 483 442 925 AT&T Microelectronics2 1,035 215 1,250 18 1,255 220 1,475 Atmel2 372 — 372 64 609 — 609 Brooktree x 113 113 33 150 — 150 Burr-Brown2 30 135 165 39 46 184 230 C-Cube Microsystems x 42 — 42 174 115 — 115 Catalyst x 46 — 46 –4 44 — 44 Cherry Semiconductor2 4 71 75 37 8 95 103 Chips and Technologies x 74 — 74 88 139 — 139 Cirrus Logic 777 — 777 59 1,235 — 1,235 Cypress2 406 — 406 48 600 — 600 Cyrix x 246 — 246 –4 235 — 235 Dallas Semiconductor 181 — 181 24 225 — 225 Elantec2 5 18 23 26 8 21 29 Electronic Designs x 25 — 25 12 28 — 28 Exar2 x 91 65 156 3 120 40 160 Exel x 24 — 24 54 37 — 37 Gennum — 34 34 18 — 40 40 Harris2 405 90 495 5 425 95 520 Honeywell 42 3 45 — 42 3 45 IBM Microelectronics2 3,725 850 4,575 25 4,815 890 5,705 IC Works2 30 — 30 43 43 — 43 ICS x 100 — 100 12 112 — 112 IDT2 389 — 389 65 642 — 642 IIT x 41 — 41 15 47 — 47 IMP 57 — 57 23 70 — 70 Intel2 9,850 — 9,850 38 13,590 — 13,590 International Rectifier 22 — 22 32 29 — 29 ISD x 39 — 39 54 60 — 60 ISSI x 64 — 64 139 153 — 153 Lattice x 134 — 134 38 185 — 185 Level One x 47 — 47 60 75 — 75 Linear Technology2 51 177 228 43 97 228 325 Linfinity Microelectronics2 9 31 40 5 10 32 42 LSI Logic 902 — 902 40 1,262 — 1,262 1 No more than approximately 25 percent of wafer requirements are met by wholly- or partially-owned fabs. 2 BiCMOS ICs included under MOS. 3 GaAs ICs included under MOS. Source: ICE, "Status 1996" 9998Y

Figure 2-4. North American Companies’ IC Sales ($M)

2-4 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

1994 1995/1994 1995 (EST) Company Fabless1 MOS Bipolar IC TotalPercent Change MOS Bipolar IC Total Maxim2 193 — 193 80 347 — 347 Micrel2 31 5 36 50 48 6 54 Micro Linear2 x 10 32 42 38 18 40 58 Microchip Technology 191 — 191 40 267 — 267 Micron 1,575 — 1,575 72 2,705 — 2,705 Mitel Semiconductor 56 — 56 21 68 — 68 Motorola2 4,640 1,228 5,868 23 5,714 1,482 7,196 National2 1026 988 2,014 16 1,200 1,130 2,330 Oak Technology x 50 — 50 280 190 — 190 Opti x 134 — 134 16 155 — 155 Orbit Semiconductor 43 — 43 35 58 — 58 Paradigm 33 — 33 58 52 — 52 Pericom Semiconductor x 23 — 23 74 40 — 40 QLogic x 56 — 56 –29 40 — 40 Quality Semiconductor x 38 — 38 24 47 — 47 Raytheon Semiconductor2,3 26 74 100 2 37 65 102 Rockwell Semiconductor3 515 — 515 26 650 — 650 S-MOS Systems x 145 — 145 6 153 — 153 S3 x 140 — 140 119 306 — 306 Sierra Semiconductor x 109 — 109 88 205 — 205 Silicon Storage Technology x 4 — 4 825 37 — 37 Silicon Systems2 120 180 300 25 205 170 375 Standard Microsystems 106 — 106 32 140 — 140 Supertex 20 — 20 85 37 — 37 Symbios Logic 354 — 354 41 500 — 500 Synergy Semiconductor — 26 26 15 — 30 30 TelCom Semiconductor2 22 3 25 60 36 4 40 Texas Instruments2,3 4,125 1,375 5,500 40 5,920 1,780 7,700 Trident Microsystems x 85 — 85 62 138 — 138 TriQuint3 30 — 30 57 47 — 47 Tseng Labs x 80 — 80 –50 40 — 40 Unitrode2 7 77 84 37 10 105 115 UTMC x 30 — 30 — 30 — 30 Vitesse3 37 — 37 22 45 — 45 VLSI Technology 587 — 587 24 725 — 725 VTC — 108 108 48 — 160 160 Western Digital x 150 — 150 — 150 — 150 WSI x 28 — 28 29 36 — 36 Xicor 104 — 104 1 105 — 105 Xilinx x 321 — 321 70 545 — 545 Zilog 223 — 223 14 255 — 255 Others 515 38 553 40 737 42 779 Total 38,370 6,450 44,820 34 52,415 7,585 60,000 1 No more than approximately 25 percent of wafer requirements are met by wholly- or partially-owned fabs. 2 BiCMOS ICs included under MOS. 3 GaAs ICs included under MOS. Source: ICE, "Status 1996" 9998Y

Figure 2-4. North American Companies’ IC Sales ($M, continued)

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-5 Worldwide IC Vendors

1995 Percent Rank Company Primary Products Growth

1 Oak Technology 280 Peripheral control ICs, graphics and multimedia ICs, and chipsets. 2 C-Cube Microsystems 174 Digital video and still image compression chips. 3 Alliance Semiconductor 174 Low-voltage fast SRAMs. 4 Integrated Silicon Solution 139 Fast SRAMs, EEPROMs, and flash memories. 5 S3 119 Graphics and video accelerator ICs. 6 Altera 101 Programmable logic devices. 7 Sierra Semiconductor 88 Mixed-signal ICs for communications and multimedia applications. 8 Chips and Technologies 88 Graphics controllers and accelerators, video circuits, and chipsets. 9 Maxim 80 Analog and mixed-signal ICs. 10 Micron Technology 72 DRAMs and fast SRAMs. 11 Xilinx 70 Programmable logic devices and FPGAs. 12 IDT 65 SRAMs, logic products, and RISC microprocessors. 13 Atmel 64 Programmable nonvolatile memory and logic chips and analog ICs. 14 Trident Microsystems 62 Graphics and multimedia-related devices. 15 Cirrus Logic 59 Peripheral control ICs, graphics and multimedia devices, and modem chips. * With sales of at least $100M in 1995. Source: ICE, "Status 1996" 13727R

Figure 2-5. Top North American IC Sales Growth Companies*

As Figure 2-7 shows, the percent share of total North American IC sales held by fabless companies is more than double what it was in 1988. Still, combined sales by the fabless suppliers in 1995 was less than one-tenth that of their fabbed counterparts. Their influence on the integrated circuit industry, however, goes way beyond what those statistics suggest. The fast pace of product innovation maintained by fabless companies has led to increased competition in the industry, often- times by forcing the manufacturers of ICs to lower their cost structures and be more aggressive in advancing their process technologies.

Top Ten North American Fabless IC Suppliers

Figure 2-8 provides a ranking of the top ten North American fabless IC suppliers. With few exceptions, the leading fabless firms enjoyed very strong sales gains in 1995, several with gains in the triple digits. On average, sales for the ten companies increased 67 percent in 1995, versus 40 percent in 1994.

2-6 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

Computers, Communications Consumer Other Markets Peripherals Altera Atmel Cirrus Logic Cypress Dallas Semiconductor Exar IDT Intel Linear Technology Maxim Microchip Technology Motorola Silicon Systems Trident Microsystems TriQuint Semiconductor Vitesse Semiconductor Xilinx Zilog

>75% of sales >50% of sales >25% of sales >10% of sales <10% of sales

Source: ICE, "Status 1996" 18957B

Figure 2-6. North American IC Companies’ End-Market Reliance

8 8%* 7

3 Companies' IC Sales

2 Percent Share of North American 1

0 1988 1989 1990 1991 1992 1993 1994 1995 Year * Had Cirrus Logic remained fabless in 1995, the share would have been 10 percent. Source: ICE, "Status 1996" 19434A

Figure 2-7. Growing Presence of Fabless IC Firms (In Terms of Sales)

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-7 Worldwide IC Vendors

1995/1994 1995 1995 Company 1994 Percent Rank (EST) Change

1 Xilinx 321 545 70 2 Altera 199 400 101 3 S3 140 306 119 4 Alliance Semiconductor 95 260 174 5 Cyrix 246 235 –4 6 Sierra Semiconductor 109 205 88 7 Oak Technology 50 190 280 8 Lattice Semiconductor 134 185 38 9 Exar 156 160 3 10 Opti 134 155 16 Total 1,584 2,641 67

Source: ICE, "Status 1996" 20456

Figure 2-8. 1995 Top Ten North American Fabless IC Suppliers ($M)

Fabless IC companies are generally focused on one or maybe two IC products types. Therefore, their sales are dependent on the condition of the markets for those particular products. The strong performances of Xilinx, Altera, and Lattice are linked to the healthy market for CMOS programmable logic devices. The flourishing graphics/multimedia and communications markets have accelerated sales for S3, Sierra, and Oak Technology. High demand for fast SRAMs has fueled sales at Alliance Semiconductor.

Although Cyrix is involved in microprocessors, a market that grew 28 percent in 1995, its sales were hurt by continued price erosion in the 486-level market. Exar is just beginning to see the benefits of the major product transitions it has made during the past two years. The company dropped many low-margin product lines and replaced them with higher margin lines through the acquisition of several companies.

Top Ten North American Merchant IC Manufacturers

The top ten North American IC manufacturers of 1995 are listed in Figure 2-9. Most of these companies enjoyed another year of healthy sales revenues. Collectively, they reported 32 percent growth in their sales of integrated circuits for the year, which comes after 27 percent growth in 1994.

Since becoming the largest North American IC company in 1990, Intel has widened the gap between it and second place to more than $5.8 billion. Intel has been very successful in promot- ing its Pentium CISC microprocessor through aggressive pricing and marketing strategies. The company also has the top selling RISC processor (i960) and is the leading flash memory supplier.

2-8 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

1995/1994 1995 1995 Company 1994 Percent Rank (EST) Change

1 Intel 9,850 13,590 38 2 Texas Instruments 5,500 7,700 40 3 Motorola 5,868 7,196 23 4 IBM Microelectronics 4,575 5,705 25 5 Micron Technology 1,575 2,705 72 6 Advanced Micro Devices 2,135 2,380 11 7 National Semiconductor 2,014 2,330 16 8 AT&T Microelectronics 1,250 1,475 18 9 LSI Logic 902 1,262 40 10 Cirrus Logic 777 1,235 59 Total 34,446 45,578 32

Source: ICE, "Status 1996" 20457

Figure 2-9. 1995 Top Ten North American IC Manufacturers ($M)

After losing momentum in the early 1990’s, Texas Instruments has had two record-setting years in a row, allowing it to capture the number two spot from Motorola in 1995. Its IC business grew 36 percent in 1994 and 40 percent in 1995. Much of the company’s strategic emphasis in semiconductors is on digital signal processors, and as a result, its DSP sales have grown substantially faster than the DSP market in the past couple of years. TI also saw strong demand for its DRAMs, mixed-signal/analog ICs, and application-specific devices in 1995.

A broad-based product portfolio has helped Motorola to maintain consistent IC revenue growth over the past several years. PowerPC RISC microprocessors, fast SRAMs, digital signal processors, customer-specific microcontrollers, CMOS gate arrays, and embedded processors were Motorola’s strongest product groups in 1995.

1995 marks the first year in which ICE classified IBM Microelectronics as a merchant IC company (i.e., more than about 25 percent of its total IC production is sold on the open market). The company’s external IC sales represented approximately 30 percent of its total IC production in 1995. As a result, the company is now the fourth largest merchant IC manufacturer in North America. Figure 2-10 provides a look at IBM’s merchant product offerings.

Consistently high demand for DRAMs, coupled with stable memory pricing, has helped Micron to propel itself up five spots from its position at the bottom of the top ten list in 1992. Micron’s IC sales (DRAMs and fast SRAMs) grew 93 percent in 1993, 68 percent in 1994, and 72 percent in 1995. To free itself of the DRAM product cycle, Micron is busy developing other products such as flash memories and radio frequency identification (RFID) chips.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-9 Worldwide IC Vendors

Product Technology

PowerPC 601 RISC MPU (50-100MHz) 0.5/0.6µm CMOS, 4-layer metal PowerPC 602 RISC MPU (66MHz) 0.5µm CMOS, 4-layer metal PowerPC 603/603e RISC MPUs (66-100MHz) 0.5µm CMOS, 4-layer metal PowerPC 604 RISC MPU (100-133MHz) 0.5µm CMOS, 4-layer metal PowerPC 620 RISC MPU (133MHz, 64-bit) 0.5µm CMOS, 4-layer metal 486 DX2/SX2/SX3/SLC2 MPUs CMOS MC196 16-bit MCU CMOS PowerPC 403GA/403GB 32-bit Embedded MCU CMOS 4M, 16M DRAMs CMOS, 5V and 3.3V 4M VRAM CMOS 1M Synch. SRAM/High-Performance Synch. SRAM CMOS PCMCIA Memory Cards, SIMMs/DIMMs — PCI Core Logic Chips 0.8µm CMOS Digital ASICs Ð CMOS2 1.0µm, 60K gates, 3-layer metal Ð CMOS4L 0.8µm, 260K gates, 4-layer metal Ð CMOS4LP (3.3V) 0.8µm, 260K gates, 3-layer metal Ð CMOS 5L 0.5µm, 1,240K gates, 4/5-layer metal Ð CMOS 5S 0.5µm, 1,600K gates, 4/5-layer metal Analog and Mixed-Signal ASICs (5V and 3.3V) CMOS, bipolar, BiCMOS RGB Palette DAC Graphics ICs 0.8µm CMOS Adaptive Lossless Data Compression (ALDC) ICs 0.8µm CMOS MPEG-2 Digital Encoders and Decoders 0.5µm CMOS Mwave DSP System-On-A-Chip CMOS

Source: ICE, "Status 1996" 19535A

Figure 2-10. Sampling of IBM’s Merchant Market Offerings

Capacity constraints, price erosion in the 486 microprocessor market, and delays in the introduction of its fifth-generation K5 microprocessor stalled AMD’s sales in 1995. The company was hit hardest by a decline in Am486 MPU revenues. Demand for its other IC products, namely flash memories, Ethernet devices, and CMOS programmable logic devices, was very strong during the year.

After reporting nearly flat sales in 1994, National finished 1995 with relatively solid growth in sales. The company’s rebound can be attributed to a shift toward higher-margin analog and mixed-signal products and away from low-margin standard logic and memory businesses. Easing of capacity constraints also helped boost sales.

2-10 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

AT&T Microelectronics’ strongest products in 1995 were FPGAs and DSPs. LSI Logic has been very successful in the standard cell ASIC market with its broad library of CoreWare functional modules. Cirrus Logic experienced growth across all of its product lines in 1995, with growth led by graphics and audio chips.

Provided below are selected announcements made by the top ten North American merchant IC manufacturers in 1995.

Top Ten North American IC Manufacturer Highlights

Intel — Wafer Fab Announcements

• Announced the establishment of a new $1.5 billion fab facility at its Leixlip, Ireland, site. Fab 14 will produce advanced logic devices, including future generations of the Pentium Pro microprocessor. Scheduled for completion in 1998, the factory will run 200mm wafers and a 0.25µm process.

• Will build its Fab 18 in Kiryat Gat, Israel—a $1.6 billion plant dedicated to flash memory production. Weekly 200mm wafer capacity is expected to reach 7,500 units. The facility is expected to start production of 0.25µm design rule devices in 1998.

• Plans to convert its Fab 9 in Albuquerque, New Mexico, from logic to flash memory device production in order to increase flash capacity until Fab 18 in Israel is opened in 1998. Intel will also increase the 150mm wafer starts at its flash-only Fab 7 in Albuquerque by 25 percent in 1996.

• Announced plans for its fourth fab in Oregon, a $2.2 billion plant that will initially be used for R&D and eventually for mass production of its P6 and P7 microprocessors. The first phase will cost $565 million and is scheduled to come on-line in 1997.

• Will phase out its Fab 4 in Aloha, Oregon, by early 1997. The facility is the company’s only remaining NMOS process fab and is no longer profitable due to a decline in interest in the older technology.

Intel — Key Agreements

• Agreed with SanDisk Corporation to cross-license the full inventory of their respective flash memory patent portfolios. The agreement does not, however, include any technology sharing or codevelopment of products.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-11 Worldwide IC Vendors

• Signed a cross-licensing agreement with Micron that allows Micron to be a true alternate source for Intel’s flash memory products. Initial shipments of 4M devices began in 2H95.

Intel — Product Briefs

• Introduced lower voltage (2.7V) versions of its 4M and 8M flash memories. The new chips offer read capabilities of anywhere from 2.7V to 5V, but they write at 5V. Both are initially implemented in a 0.6µm CMOS process, but will be converted to a 0.4µm process in 1H96.

• Extended its core-logic chip business from the desktop to the notebook market. The new Intel 82430MX PCIset chipset includes active clock throttle (ACT), an element that allows a microprocessor to run at full speed for a given duration for performance-sensitive application. When the application is finished, the system automatically drops into a lower speed.

• Entered the merchant market for Fast Ethernet LAN ICs, almost a year after Intel’s network- system division began offering Fast Ethernet network-interface cards.

• Unveiled its long-rumored low-power embedded 486, code-named Hummingbird, for use in handheld systems. The chip is offered in two versions, the 486SXSF with a 32-bit data bus and the 486GXSF with a 16-bit data bus. Both are built in Intel’s mature 0.8µm CMOS process.

• Formally launched volume production of its sixth-generation Pentium-successor MPU in 4Q95. Intel has confirmed that the so-called Pentium Pro (P6) will migrate from the current 2.9-volt, 0.6µm BiCMOS process to a 2.5-volt 0.35µm CMOS process in 1996.

• Unveiled a new power management technology called Voltage Reduction Technology (Vrt) and new 75MHz and 90MHz Vrt Pentiums for the mobile computing market. Vrt is said to allow the core of the processor to operate at 2.9V while still maintaining its compatibility with existing 3.3V core logic and cache devices.

• Began sampling its long-awaited i960 “P2P” microprocessor, which features dual, bridged Peripheral Component Interconnect (PCI) interfaces for handling local network functions on secondary PCI buses. The P2P is the first in a series of i960s called IQ, which will be dedicated for networking intelligence.

• Announced the availability of a design guide and software concerning the use of its Native Signal Processing (NSP) technology. NSP is said to make the company’s Pentiums capable of performing digital signal processing functions, such as multimedia and communications, thereby eliminating the need for additional dedicated DSP chips.

2-12 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

• Introduced a new version of its 8-bit 80C51 MCU that the company claims improves system performance up to 15 times. Intel also introduced an addition to its MCS 96 family of 16-bit microcontrollers that is targeted at the automotive market.

Texas Instruments — Wafer Fab Announcements

• Will invest an estimated $500 million to $1 billion to boost logic and memory chip production at its fab in Japan. The company plans to install equipment with a weekly 200mm wafer output capacity of 5,000 to 7,500 units by the year 2000.

• Agreed with Kobe Steel to invest about $500 million to double the capacity of KTI Semiconductor Ltd., their joint manufacturing venture in Japan. The expansion will allow for the production of 64M DRAMs using 0.35µm process technology beginning in the spring of 1997. Once completed, KTI will have the capacity to produce 6,250 200mm wafers per week.

Texas Instruments — Key Agreements

• Expanded its long-standing agreement with Philips on standard logic devices with plans to add a new Advanced Low-Voltage CMOS family of 3.3V parts.

• Formed a joint venture with MEMC Electronics Materials to set up a new company in Sherman, Texas, to produce raw 200mm silicon wafers. Named MEMC Southwest Inc., the operation will supply wafers for TI’s internal use and for the merchant market beginning in 1997.

• Settled its legal dispute with Cyrix that arose in late 1993 concerning the alleged breaches of a 1991 agreement between the two. As a result of the settlement, TI was granted licenses to certain Cyrix-designed microprocessors and the option to take licenses under certain future Cyrix patents, in exchange for royalty payments. However, TI was not given rights to the design of Cyrix’s next-generation M1 processors.

• Collaborating with IMEC, an independent Belgian R&D organization, on a 0.18µm pho- tolithography process technology for next-generation gigabit-class ICs. The team hopes to have the capability to manufacture 1G DRAMs by the year 2001.

• Provided Ericsson with its 0.5µm CMOS process technology for the production of ASICs based on TI’s TEC3000 gate array family in Ericsson’s new fab facility in Sweden. Ericsson plans to upgrade the fab to 0.35µm technology, also to be provided by TI.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-13 Worldwide IC Vendors

Texas Instruments — Product Briefs

• Began sampling the first member of a new microcontroller family that integrates the ARM7 RISC core from Advanced RISC Machines with a 100,000-gate gate array. The chip is fabricated using a 0.6µm, triple-layer metal process.

• Announced a low-cost (less than $100) version of its MVP digital signal processor (the TMS320C80). The new 320C82 offers a peak performance of 1.5 billion operations per second using a 50MHz clock, at a price that is less than half that of the original C80.

• Introduced its first synchronous DRAM. Volume production of the 16M part began in mid- 1995.

• Launched the first members of a family (C54x series) of 16-bit fixed-point DSPs for wireless communications applications. Separately, TI announced a new 32-bit floating-point DSP that is positioned as a mass-market device at the same price point that the company has traditionally put its fixed-point devices.

• Sold its antifuse FPGA business to Actel Corporation in April 1995. As a result of the trans- action, TI will no longer market the parts, but will increase the volume of FPGA manufacturing it does for Actel. TI had been a licensed second-source of Actel’s FPGAs since 1988.

• Unveiled its TGC3000 scalable gate array, which is based on a 3-volt, 0.5µm CMOS process and offers up to 1.15 million usable gates and 700 I/Os. The chip is targeted at customers in the telecom and computer industries.

• Introduced a modular mixed-signal microcontroller library, called the cMCU370, that includes the firm’s first 16-bit controller core and other elements necessary to build integrated, application-specific MCUs. The company is planning to add flash memory to the library. The 0.8µm cMCU370 library is the most recent fruit of a partnership with Delco Electronics that began in 1990.

Motorola — Wafer Fab Announcements

• Announced plans to build a $1.5 billion DRAM fab in the United States in partnership with Siemens. The location of the fab site was to be selected by the end of 1995. Motorola has said it is not seeking to become a top tier DRAM producer. Rather, it is seeking to meet demand for DRAMs from its customers.

2-14 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

• Building a $720 million 200mm wafer fab in Tianjin, China, to be named MOS 17. Construction of the facility started in November 1995, and it is set to be operational in 1Q98. Production is expected to ramp to about 3,000 wafers per week.

• Plans to build a major $3 billion IC manufacturing complex near Richmond, Virginia, over the next several years. Construction of the first $1 billion fab facility started in late 1995. Production at the plant will start in 1998 on 200mm wafers at 0.35µm design rules, with a planned transition to 0.25µm.

• Will invest about $425 million to build a 0.5µm-0.65µm logic IC production facility at its Nippon Motorola fab in Aizu, Japan. Construction will begin in 1997 and operations in 1998. It will be equipped with 200mm wafer lines that will add 10,000 to facility’s weekly wafer capacity.

• Announced expansion plans for its fab in Research Triangle Park, North Carolina, which was purchased from Harris in 1994. Phase I, now completed, included the conversion from 100mm wafers to 150mm wafers, and an upgrade to 1.0µm CMOS technology. Phase II, scheduled to begin in 1996, will give the factory 200mm wafer and submicron capabilities.

• Purchased Digital Equipment Corporation’s wafer fab in Scotland in early 1995 for $200 million. Motorola plans to make the site its worldwide center for BiCMOS manufacturing. As part of the deal, Motorola agreed to take on an existing foundry contract for AMD’s Am486 microprocessors, as well as to continue producing Alpha RISC microprocessors for DEC.

Motorola — Key Agreements

• Announced it would join the IBM-Siemens-Toshiba DRAM R&D team to develop a 1G DRAM device. Through the deal, Motorola will also gain access to work the three other members have done on 64M and 256M devices.

• Said its PowerPC microprocessor collaboration with IBM will continue well into the future as the companies will jointly develop common process technologies to build future generations of the RISC processor.

• Teaming with SGS-Thomson to develop a chipset for the emerging V.34 28.8K/sec modem market. The chipset combines Motorola’s 68356 microprocessor, SGS-Thomson’s ST544 codec, and the software required to support V.34 data pump functions. The 68356, introduced in June 1993, combines a 68000 general-purpose MPU, a dedicated RISC communications engine, and the 56002 24-bit DSP.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-15 Worldwide IC Vendors

Motorola — Product Briefs

• Said the introduction of the PowerPC 620 will be delayed from late 1995 to mid-1996. Motorola and IBM said there were no profound problems with the design; they are re-evaluating their process options to see if a smaller die and higher performance can be achieved to make it more competitive.

• Unveiled a new family of 24-bit DSPs that deliver 80 MIPS performance at 80MHz for signal processing intensive applications such as wireless telecommunications and multimedia. In addition, two new 8-bit 68HC11 microcontrollers, primarily targeted at communications applications, were introduced.

• Announced a new line of 0.65µm CMOS gate arrays, the H4EPlus series, that features a core architecture with 50 percent greater gate density than previous generations. Available gate counts for the devices range from 12,000 to 278,000.

• Unveiled a new embedded PowerPC chip for applications in handheld computers and set- top boxes. The MPC821 combines a PowerPC core derived from Motorola’s MPC505 and a second RISC MPU that controls communications functions.

• Introduced its Customizable Standard Products (CSP) program, which the company started developing in 1993. The two-pronged program offers a series of customizable application- specific ICs (MC92000 family) targeted at the Asynchronous Transfer Mode (ATM) communications market. For customers seeking greater product differentiation, the chips can be used to build specialized proprietary CSP designs with up to several thousand gates of user- specified logic, memory, and peripheral function blocks.

• Rolled out a pair of 1M synchronous SRAMs, dubbed BurstRAMs, which feature access times as fast as 5ns. The BurstRAMs are intended for use as second-level cache memory for high-performance MPUs, including PowerPCs, MC68040s, Pentiums, and 486s.

• Brought out its Coldfire 32-bit microprocessor core technology. Coldfire is a subset of the Motorola 68000 instruction set and is available as an ASIC core that can be integrated with on-chip peripherals and memory to form a low-cost 32-bit single-chip microcontroller.

IBM Microelectronics — Wafer Fab Announcements

• Joined with Toshiba to construct a $1.2 billion 64M DRAM facility in Manassas, Virginia. The facility will be equally shared by the partners and will have its own identity. It will be ready for volume production in late 1997 or early 1998 and will ramp to 6,750 200mm wafers per week.

2-16 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

• Sold one of its fab facilities in Corbeil-Essones, France, to Wesson France SA, a new company representing a group of Hong Kong investors. Wesson France is making 1.0µm bipolar devices at the plant primarily for Asian telecommunications markets.

IBM Microelectronics— Key Agreements

• Signed a manufacturing agreement with Ramtron for Enhanced DRAM (EDRAM) production. Under the agreement, IBM is serving as a foundry for the production of EDRAMs designed by Ramtron subsidiary, Enhanced Memory Systems. IBM also gained a non-exclusive license to sell a portion of the devices.

• Closed a deal with Cirrus Logic to form a joint IC manufacturing subsidiary, called Micrus, that is producing wafers using 0.8µm to 0.5µm CMOS technology. Micrus operates from a rejuvenated IBM plant in East Fishkill, New York. Volume production started in mid-1995. A $320 million capacity expansion is planned for mid-1996 completion.

• Said its PowerPC microprocessor collaboration with Motorola will continue well into the future as the companies will jointly develop common process technologies to build future generations of the RISC processor.

• Signed an agreement with S3 Incorporated calling for IBM to manufacture S3’s graphics accelerators on a foundry basis.

• Agreed with Philips to form a joint venture to manufacture ICs at IBM’s fab facility in Boeblingen Hulb, Germany. The new company, called SubMicron Semiconductor Technologies GmbH (SMST), is held 51 percent by Philips and 49 percent by IBM. SMST is supplying products solely to Philips and IBM, manufacturing 4M DRAMs for IBM and 0.8µm logic ICs for Philips. The two companies are also discussing the possibility of further technology cooperation.

• Along with its partners Siemens and Toshiba, claimed to have developed their 256M DRAM, touted as the smallest and fastest fully functional device for its density yet produced. The 0.25µm device took $1 billion and more than two years to develop.

IBM Microelectronics — Product Briefs

• Launched what it calls its SystemCORE ASIC program, designed to bring additional PowerPC cores, along with other technologies such as the company’s Mwave DSP and possibly even the NexGen x86 core, into the company’s library.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-17 Worldwide IC Vendors

• Introduced two video palette digital-to-analog converter chips that are designed to enhance the capability of PCs and workstations to display 3D and digital video images.

• Said the introduction of the PowerPC 620 will be delayed from late 1995 to mid-1996. IBM and Motorola said there were no profound problems with the design; they are re-evaluating their process options to see if a smaller die and higher performance can be achieved to make it more competitive.

• Added a member to its Mwave family of DSPs, the Mfast (Mwave folded array signal trans- form processor) highly parallel, single-chip DSP. The Mfast is targeted at multimedia applications in the consumer PC arena.

• Started sample shipments of a 167MHz version of the PowerPC 603e microprocessor. The new 603e, which is designed for low-power portable computers, uses a five-layer-metal process instead of the four-layer-metal process used for previous members.

• Unveiled the latest member of its Power 400 line of microprocessors for embedded control applications. The PowerPC 403GC is the first member with an integrated memory management unit (MMU), allowing it to be used in set-top boxes and PDAs that have multitasking operating systems.

• Released what it calls the fastest high-speed CMOS-based SRAM. The 1M synchronous SRAM features an access time of 2.5ns. It’s designed for PowerPC and other high-performance RISC-based servers and workstations with clock speeds of up to 200MHz.

• Readying a low-cost, intra-frame-only, MPEG-2 single-chip video encoder. The chip will be targeted at a variety of applications ranging from PCs to high-end professional systems.

• Unveiled its CMOS 5S process, a derivative of its leading-edge CMOS 5L technology. Although a 0.5µm process, CMOS 5S provides 0.36µm L-effective features for standard cell and gate array devices. New ASICs based on the 5S process provide up to 1.6 million usable gates and support speeds up to 120-125MHz.

Micron — Key Agreements

• Signed a cross-licensing agreement with Intel that allows Micron to be a true alternate source for Intel’s flash memory products. Initial shipments of 4M devices began in 2H95.

2-18 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

Micron — Product Briefs

• Unveiled the first of its burst EDO DRAMs with hopes that the 16M part will lure OEMs away from SDRAMs as the industry begins shifting to the 16M generation. Micron developed burst EDO DRAM technology as a next-generation high-performance alternative for main memory in PCs.

• Announced it would phase out 5-volt asynchronous SRAMs by the end of 1995.

AMD — Wafer Fab Announcements

• Will add a second fab to its Fujitsu-AMD Semiconductor Ltd. joint venture with Fujitsu in Japan. The new fab will roughly double the site’s wafer capacity. Initial production will begin in late 1997 at the 0.35µm level.

AMD — Key Agreements

• Acquired rival NexGen Inc. for about $900 million in stock. Under terms of the agreement, AMD will provide production capacity for NexGen’s Nx686 and future-generation microprocessors. AMD will cancel its sixth-generation K86 microprocessor and instead market NexGen’s Nx686 under the AMD name. AMD still intends to introduce its delayed K5 microprocessor in 1996. NexGen will operate as a wholly owned subsidiary of AMD.

• Signed an agreement with Minc Inc. in March 1995 that calls for Boulder, Colorado-based Minc to take on the responsibility of developing design software and fitter support for all AMD CPLD products.

• Announced the formation of a long-term, strategic relationship with Hewlett-Packard to develop low-power, highly integrated, silicon engines for the handheld computing market. The devices will feature either 386 or 486 cores.

AMD — Product Briefs

• Revealed its Mach 5 Value Plus family of complex PLDs (CPLDs) that are designed to improve design flexibility and are targeted at the low end of the FPGA market. The Mach 5 set of devices are built on a pure 3.3V process and feature speeds as fast as 7.5ns and densities greater than 300 macrocells.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-19 Worldwide IC Vendors

• Announced its first 8M, 5-volt-only flash memory and laid out plans for a 3-volt-only offering in early 1996. The new chip currently uses 0.5µm technology.

• Admitted that its K5 microprocessor would suffer another delay, with the company now pro- jecting that volume production will not begin until 3Q96. A scaled-down version of the K5 (the SSA5) is supposed to start shipping late in 1Q96.

• Announced a clock-tripled 120MHz version of the 486DX4. The company also started sample shipping an MPU called the Am5x86, which is being billed as a fifth-generation-compatible MPU based on a 133MHz 486 core.

• Expects to push its 486 microprocessors to 150MHz clock speeds by 1Q96. This will be accomplished by manufacturing the devices in a 0.35µm process at its new Fab 25 in Austin, Texas.

• Launched what it claims is the first single-chip wireless LAN media access controller (MAC) that can be designed into PCMCIA cards, ISA Plug and Play adapters, PC motherboards, or access points that connect mobile users to the network.

• Brought to market one of the fastest 128 macrocell devices, the MACH231, featuring speeds as fast as 7.5ns. The company also unveiled one of the largest in-circuit programmable CPLDs, the 256-macrocell MACH465, said to offer 10,000-gate density in addition to JTAG testing capability.

National — Wafer Fab Announcements

• Spending $600 million to upgrade its Portland, Maine, manufacturing facility for 0.25µm production on 200mm wafers. The upgrade will add 40,000 square feet of new Class 1 cleanroom. First silicon is expected in the summer of 1997.

• Expanding its Arlington, Texas, wafer manufacturing site by adding a third module at a cost of about $600 million. The new 27,000-square-foot cleanroom will run 150mm wafers with a 0.65µm process initially, migrating to a 0.35µm process over the next few years. It is scheduled to come on-line in mid-1996.

• Outlined plans to double the output capacity of its Greenock, Scotland, Fab 2 facility by converting it from 100mm to 150mm wafer production by the end of 1996. In addition, the company’s 150mm Fab 3 will be expanded by as much as three times its current capacity over a four-year period. Fab 1, which runs 100mm wafers, will not be expanded.

2-20 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

• Invested over $100 million in a new 20,000-square-foot, Class 1 cleanroom at the company’s Fairchild Research Center in Santa Clara, California, for the research and development of devices with 0.35µm design rules initially, and 0.25µm design rules in the future. The facility began running 200mm BiCMOS and CMOS wafers in late 1995.

National — Key Agreements

• Joined with SGS-Thomson to jointly develop a digital bus standard for linking home-enter- tainment equipment.

• Agreed to help finance production capacity expansion at foundry-dedicated Tower Semiconductor Ltd., which is located in Israel. The deal follows a three-year agreement the two companies signed in early June 1995 that called for Tower to increase its monthly wafer production commitment to National. As of March 1995, Tower was committed to supplying National with 5,000 wafers per month.

• Acquired Comlinear Corporation in early 1995. Comlinear is a Fort Collins, Colorado-based supplier of analog signal processing circuits now operating as a separate business unit within National’s Analog Mixed-Signal Systems Division.

National — Product Briefs

• Acquired ceramic substrate technology and a manufacturing facility from Hughes Aircraft Co., which National plans to use for wireless communications devices. The company plans to embed passive and active components into a multilayer ceramic substrate to create com- pact modules that support frequencies up to 1.8GHz.

• Unveiled its line of 486-compatible chips targeted at embedded applications, rather than the PC market. National designed its NS486 core from the ground up. It may be integrated with a collection of peripherals, including memory controllers, a single PCMCIA slot controller, and an LCD controller.

• Introduced an audio processor that combines a RISC core and a digital signal processor module as well as a 4M flash memory device using National’s Microwire interface that is aimed at applications requiring audio processing and storage, such as digital answering machines.

• Introduced the industry’s first monolithic CRT driver. It is built on the company’s new proprietary VIPIIIH high-voltage, high-speed bipolar process.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-21 Worldwide IC Vendors

• Said it will enter what it calls the broadband transmission support market with a new family of network devices based on U.S. Synchronous Optical Network (Sonet) and worldwide Synchronous Digital Hierarchy (SDH) specifications.

• Announced a low-cost chipset that allows a digital data path to be transmitted by radio stations for CD-quality sound and other benefits from digital data transmission. National believes products incorporating the chipset should appear by the end of 1996.

• Expanded its presence in the electronic security market with the introduction of a pair of CMOS devices (HiSeC code generator and decoder) for the creation of an automotive keyless entry system that is claimed to be impossible for car thieves to compromise. In 1997, National says it will offer a comprehensive vehicle information system that could include a GPS navigation system, a maintenance system, and a security system that will allow parked cars to be disabled.

• Began shipping its first Toshiba-derived 16M NAND flash memory chips in February 1995.

AT&T — Wafer Fab Announcements

• Sold its fab facility in Missouri to startup Mid-West Microelectronics, which will use it to serve as a foundry for nonvolatile memory, custom memory, and microprocessor-related devices using a 0.5µm CMOS process.

AT&T — Key Agreements

• Formed a deal with Cirrus Logic that will create a joint manufacturing venture at AT&T’s current fab in Orlando, Florida. The two partners will double the current size of the plant to accommodate a new 200mm wafer line that is expected to begin production with a 0.35µm process in early 1997. The expanded fab will be capable of 5,000 wafer starts per week, which the companies will share equally.

• Signed an agreement with Hewlett-Packard to develop and dual-source fiber-optic transceivers for Sonet/SDN and ATM applications. The first devices were shown in 3Q95.

• Entered a non-exclusive agreement with VLSI Technology to develop a commercial crypto- graphic chip for the protection of data over wireless networks or the Internet.

• Agreed with NEC to extend their cooperative ASIC process development to the 0.25µm level. The partners plan to have a prototype 0.25µm logic chip ready by mid-1996.

2-22 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

• Increased its stake in TriQuint Semiconductor to 8.2 percent and gained guaranteed GaAs wafer output for the next 10 years in return for the $1.5 million equity investment.

AT&T — Product Briefs

• Preparing a major push beyond its traditional mixed-signal communications focus in standard cell ASICs. The company plans to add a wide range of cores to its library, including the i960 and Sparc 32-bit MPUs; DSP cores; MPEG-decoder, video processing, and other multimedia cores; communications modules; and DRAM and flash memory arrays.

• Developed a chipset that enables smaller-scale Ethernet hub manufacturers to design an expandable 12-port, four-segment switching system that can be quickly reconfigured through software.

• Added to its DSP1600 family of digital signal processors a 0.5µm CMOS device that reduces from two to one the number of DSPs needed for processing the modem and voice-coding function in digital cellular phones.

• Has developed a V.34 28.8Kps modem chipset (Catamaran) that supports the Intel-led digital simultaneous voice and data (DSVD) protocol specifications.

• Disclosed the availability of a 40,000-gate FPGA in April 1995 that is claimed to be the highest density FPGA on the market. The chip was made possible by a new 0.5µm, triple-layer- metal process. AT&T expects to introduce a 60,000-gate FPGA based on a 0.35µm process in 1996.

LSI Logic — Wafer Fab Announcements

• Broke ground on a new fab complex in Gresham, Oregon. The first phase of the new facility is expected to cost between $600 million and $800 million. The line will have the capacity to run 4,000 200mm wafers per week for the production of 0.35µm design rule devices. Initial chip production is expected to take place in early 1997.

LSI Logic — Key Agreements

• Made a $20 million investment in Chartered Semiconductor’s newly built Fab II, in exchange for guaranteed wafer capacity in 1996. The investment gives LSI a minority stake in Chartered and an unspecified number of 200mm wafers.

• Paid $125 million to Kawasaki Steel to purchase the remaining half of their joint venture Nihon Semiconductor. The move supports LSI Logic’s plan to expand capacity to meet demand for its advanced ASIC devices.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-23 Worldwide IC Vendors

LSI Logic — Product Briefs

• Revealed its G10 series of ASICs that can integrate up to five million usable gates or 49 million transistors on a single chip, using 0.35µm (0.25µm Leff) process technology. LSI Logic says the G10 ASICs are application-optimized. That is, customers can select from a variety of process, core, and library-cell options to make a chip that is better optimized for a specific system.

• Increased its push into high-end communications markets with the launch of a Sonet/SDH interface core for 155Mbps residential broadband services, and a chip that integrates an ATM network controller and a PCI bus.

• Introduced a family of three Mips R4000-architecture RISC microprocessor cores for building a system-on-a-chip. The first two cores are implemented in LSI’s 0.5µm process technology and the third will be produced using a 0.35µm process.

• Announced its first mixed-signal ASIC offerings in May 1995. The first two products were a four-wire Ethernet 10Base-T standard cell and an Attachment Unit Interface (AUI) cell. The company plans to expand its cell-based ASIC product line to include a variety of mixed-signal cells.

Cirrus Logic — Key Agreements

• Formed a deal with AT&T Microelectronics that will create a joint manufacturing venture at AT&T’s current fab in Orlando, Florida. The two partners will double the current size of the plant to accommodate a new 200mm wafer line that is expected to begin production with a 0.35µm process in early 1997. The expanded fab will be capable of 5,000 wafer starts per week, which the companies will share equally.

• Decided to invest in a new billion-dollar joint-venture wafer foundry in Taiwan, called United Silicon, as part of its effort to increase its ownership of manufacturing capacity. Led by Taiwan’s UMC, United Silicon is expected to commence 200mm wafer processing using UMC’s 0.35µm technology in late 1997..

• Licensed the TrueSpeech family of speech compression and decompression algorithms from DSP Group Inc.

• Along with Samsung, entered the PC Card market with a full range of mass storage products based on flash card controllers and PCMCIA form-factor storage devices from Cirrus and 16M NAND flash memories from Samsung.

2-24 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

Cirrus Logic — Product Briefs

• Introduced its long-awaited single-chip MPEG-1 video decoder specifically designed for PCs. The chip employs an MPEG-1 video core licensed from CompCore Multimedia and it is the company’s first MPEG chip to feature PCI-bus mastering.

• Unveiled its VisualMedia architecture for high-end multimedia graphics controllers based on the Rambus interface technology that will eventually include graphics, video, 3D, and communications functions. The first chip in the family is a full-featured 64-bit graphics controller that takes advantage of the 500MByte/sec bandwidth that Rambus DRAMs (RDRAMs) deliver. The device also contains a 170MHz integrated RAMDAC.

• Targeting the booming remote-access networking market with a new dual-channel serial communications controller. The chip supports all major remote-access protocols including PPP, SLIP, and MNP4—the AppleTalk protocol.

• Introduced a pair of hard-drive controller chips featuring “ID-less” technology that it claims can add up to 10 percent to the capacity of a hard-disk drive.

NORTH AMERICAN CAPTIVE IC MANUFACTURERS

ICE’s definition of a captive integrated circuit manufacturer is provided in Figure 2-11. The main criteria for an IC manufacturer to be labeled “captive” is that no more than 25 percent of its device production is sold on the open market, in terms of dollars. Typically, a captive manufacturer is a well established manufacturer of electronic systems that designs and produces ICs internally to help differentiate its systems from the competition. ICE also classifies R&D laboratories as captive (Figure 2-12).

The majority of the world’s captive IC manufacturers are based in North America. Of course, there are many Japanese and European system manufacturers that transfer a great deal of ICs internally. However, they generally sell more than 25 percent of their ICs on the open market and thus are not classified as captive.

North America’s captive IC manufacturers include Hewlett-Packard, Hughes Electronics (Hughes Aircraft and Delco Electronics), Digital Equipment, Nortel (Northern Telecom), Medtronic, Westinghouse, and until 1995, IBM. By definition, IBM became a merchant manufacturer of ICs in 1995 due to the tremendous growth of its external IC business during the past couple of years.

Figure 2-13 provides details about the captive IC fabrication facilities currently in operation.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-25 Worldwide IC Vendors

¥ Sells less than approximately 25 percent of its IC production to the open market ¥ Has the primary goal of serving in-house needs ¥ May or may not possess a dedicated open-market sales force

Source: ICE, "Status 1996" 8392D

Figure 2-11. Captive IC Producer Guidelines

• Los Alamos National Labs – Los Alamos, New Mexico • MCC – Balcones Research Center – Austin, Texas ¥ Microelectronics Center of North Carolina Ð Research Triangle Park, North Carolina • Sandia National Labs – Albuquerque, New Mexico ¥ Sematech Ð Austin, Texas

Source: ICE, "Status 1996" 18938

Figure 2-12. Major North American Semiconductor Research Laboratories

Former Captive IC Producers

Besides IBM, there are many other system manufacturers that were once captive producers of ICs (Figure 2-14). Several of the companies, like IBM, saw the external portion of their IC businesses increase to the point at which they could be considered merchant. Meanwhile, a number of the former captives discontinued internal IC production completely in favor of out-sourcing devices, such as ASICs. For many, the availability of ASICs eliminated the need for in-house fabrication, while still allowing for some customization of the ICs they use in their systems. Figure 2-15 list some of the large system manufacturers that do not produce their own ICs.

Figure 2-16 gives some of the advantages and disadvantages of captive IC production. As already mentioned, one of the major justifications for captive production is the availability of proprietary devices that help to differentiate one’s electronic systems. Another major advantage is the continuity of IC supply. Unlike fabless OEMs, captives do not always depend on the well-being of the companies from which they receive their IC supply. Captives also have the ability to maintain a supply of obsolete ICs that may be unavailable elsewhere.

2-26 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

Wafer Company Location Technology Products/Comments Size

Aerojet Electronics Azusa, CA 100mm GaAs, MOS Military prototypes, satellite sensors The Aerospace Corporation El Segundo, CA 100mm CMOS, SOS, SOI Custom prototype military and rad-hard circuits Allied Signal Columbia, MD 100mm CMOS, BiCMOS, BCD, GaAs; 1.2µm ASICs; selective outside customers Cray Research Chippewa Falls, WI 100,200mm Bipolar, GaAs, BiCMOS/ECL/CMOS; 200mm line is for pilot production of ASICs ≥0.5µm Digital Semiconductor Hudson, MA 100-200mm Bipolar, CMOS; 0.35 - 2.5µm MPUs, MCUs, MPRs, ASICs, logic ICs, and custom ICs John Fluke Manufacturing Everett, WA 100mm PMOS, CMOS, BiCMOS; 2.0µm Custom linear ICs and some digital ICs Hughes Electronics Delco Electronics Kokomo, IN 100,125mm HMOS, NMOS, CMOS, Bipolar; 0.8 - 2.0µm ASICs, MPUs, MCUs, linear ICs, and logic ICs Hughes Aircraft Company Torrance, CA 3in GaAs MMICs, MM wave devices, and subsystems Newport Beach, CA 100mm CMOS, BiCMOS, SOS, CryoCMOS; ASICs, MPUs, memory ICs, LCD drivers, rad-hard ICs, 1.25 - 0.5µm analog ICs, and foundry services Hewlett-Packard Company Fort Collins, CO 150mm Bipolar, CMOS; 0.5 - 1.0µm MPUs, RFICs, microwave ICs, and ASICs Corvallis, OR 150mm CMOS; 0.5 - 1.0µm ASICs and MPUs San Jose, CA 3in, 100mm Bipolar, GaAs; 0.5 - 5.0µm ASICs; optoelectronics Newark, CA 100mm Bipolar Analog ICs, RFICs Avantek, Inc. Santa Clara, CA 3in GaAs MMICs Lockheed Missiles & Space Co. Palo Alto, CA 125mm CMOS, SOS, GaAs; ≥1.5µm R&D and pilot production of ASICs and rad-hard ICs Fort Worth, TX 100mm MOS R&D of custom military products Lockheed Sanders Nashua, NH 3in GaAs; ≥0.25µm Microwave, MMIC, and linear prototype ICs, and ASICs Martin Marietta Aerospace Co. Orlando, FL 3in, 100mm CMOS, GaAs; ≤1.25µm Prototype MMICs and custom circuits for MM wave radar systems Medtronic Micro-Rel Tempe, AZ 100mm Bipolar, CMOS, BiCMOS; ≥1.5µm Linear, digital, and mixed-signal ASICs and full-custom ICs Nortel (Northern Telecom) Ottawa, Canada 150mm CMOS, BiCMOS; 0.5 - 1.2µm Custom and cell-based ICs Watkins-Johnson Palo Alto, CA 3in GaAs Microwave circuits Westinghouse Baltimore, MD 100,150mm GaAs, Bipolar, CMOS, MOS; ≤3.0µm R&D through pilot production of ASICs, linear ICs, MPUs, memroy ICs, and MMICs

Source: ICE, "Status 1996" 9477N

Figure 2-13. North American Captive IC Manufacturers’ Fab Facilities

Major disadvantages to captive IC production include the high cost of developing advanced submicron chips and the higher cost of building and maintaining state-of-the-art fabrication facilities in which to make them. This is believed to be the main reason IBM Microelectronics launched a worldwide microelectronics effort in 1992 by offering to sell virtually every product and service in its technology portfolio. Another likely reason stems from the fact that the semiconductor industry is in an era of increasingly open standards. In order for IBM Microelectronics’ chip designs to set standards, they have to be sold to more customers than just IBM Corporation.

Captive IC Production Values

For comparison with merchant IC companies, ICE categorizes captive firms according to the “if sold” value of their IC production. This value includes development costs and non-recurring expenses comparable to what would be charged if the work were contracted to an outside vendor. Estimates of the 1995 IC production value for each of the major captives is given in Figure 2-17.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-27 Worldwide IC Vendors

Company Year of Status Change

Amdahl 1985 Discontinued internal IC production Honeywell 1987 Reclassified as a merchant UTMC 1987 Reclassified as a merchant Tektronix 1987 Reclassified as a merchant Unisys 1988 Phased out volume IC production Data General 1988 Discontinued internal IC production AT&T 1989 Reclassified as a merchant Western Digital 1989 Reclassified as a merchant Honeywell 1989 Kept solid state electronics center, Plymouth, MN; sold digital products center, Colorado Springs, CO; reclassified as a captive Cray Computer 1990 Started captive GaAs IC line Eastman Kodak 1990 Discontinued internal IC production Ford Automotive 1990 Discontinued internal IC production Loral Aeronutronics 1991 Discontinued internal IC production Honeywell 1992 Reclassified as a merchant Unisys 1993 Discontinued internal IC production Commodore 1994 Discontinued business Rockwell 1994 Reclassified as a merchant McDonnell Douglas 1994 Discontinued internal IC production Xerox 1995 Discontinued internal IC production IBM 1995 Reclassified as a merchant

Source: ICE, "Status 1996" 13385H

Figure 2-14. Companies That Have Changed Captive Status

•Amdahl •McDonnell Douglas •Apple Computer •Prime Computer •Boeing •Storage Technology Corp. •Compaq Computer Corp. •Sun Microsystems •Convex Computer •Tandem Computers •Data General •Unisys • Ford Motor Company •Wang Laboratories •Intergraph Corporation ¥ Xerox

Source: ICE, "Status 1996" 11313G

Figure 2-15. “Fabless” System Manufacturers

2-28 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors

DISADVANTAGES

ADVANTAGES DISADVANTAGE DESCRIPTION Capital Investment Fabrication cleanrooms and equipment cost over a billion ADVANTAGE DESCRIPTION dollars Proprietary Unique ICs can provide In-house ICs Favored Difficult to capitalize on open Circuits competitive edge market bargain prices Reliability Control Direct IC quality control Lacking Second Source Second source provides insurance can improve end product Learning Curve Lower volume Innovation Improved systems designed in at chip level Attracting Key Personnel Many captives lack glamour and appeal of merchants Quick Turnaround Especially important for “Hot” products Continuity Of Supply System house not dependent on open market

Source: ICE, "Status 1996" 12100C

Figure 2-16. Major Advantages and Disadvantages for Captive IC Production

1995/1994 Company 1994 1995 Percent (EST) Change

Hewlett-Packard 585 655 12 Hughes Electronics 360 340 –6 Hughes Aircraft 125 100 –20 Delco Electronics 235 240 2 Digital Semiconductor 270 305 13 Medtronic Micro-Rel 113 125 11 Nortel (Northern Telecom) 100 110 10 Westinghouse 21 22 5 Xerox 40 — –100 Others 81 73 –10 Total 1,570 1,630 4

Source: ICE, "Status 1996" 13631H

Figure 2-17. Captive IC Production Values

Overall, the value of captive IC production in North America grew 4 percent in 1995, excluding IBM’s transition from captive to merchant in 1995. As can be seen, without IBM’s estimated $5.4 billion in IC production in 1995, the total value of captive IC production is minimal compared to size of the merchant IC industry.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-29 Worldwide IC Vendors

Merchant market activities of the major captives are given in Figure 2-18. Most of the companies are increasing the emphasis on their external IC businesses. One exception is Hewlett-Packard. Faced with a shortage of manufacturing capacity, HP made a strategic decision in late 1993 to exit the external IC foundry business (within a year) in order to focus on internal needs.

Percent of 1995 1994 1995 Merchant IC IC Production Merchant Company Value Value Offerings Value Sold to Emphasis ($M) ($M, EST) Merchant Market

Hughes Electronics ASICs, GaAs ICs, 81 80 24 Increasing automotive ICs Westinghouse GaAs ICs, memory ICs, 4 5 23 Increasing MPUs, and linear ICs Digital Semiconductor MPUs, logic ICs, graphics 25 50 16 Increasing ICs, foundry Medtronic Micro-Rel Foundry, ASICs 16 16 13 Stable Hewlett-Packard Telecom and datacom 45 40 6 Stable ICs, MPUs

Source: ICE, "Status 1996" 13384H

Figure 2-18. Merchant Activities of Captive IC Manufacturers

Provided below are selected IC-related announcements made by the major North American captive companies in 1995.

Captive IC Manufacturer Highlights

Hewlett-Packard

• Unveiled an infrared (IR) transceiver that will transmit data at 4M/sec over distances up to one meter, eliminating the need for cables to exchange files between PCs and peripherals. The devices will suit a range of other applications as well.

• Revealed its PA-7300LC RISC microprocessor in October. At that time, HP claimed the 7300LC would outperform (160MHz) every processor on the market except Digital’s 21164 Alpha MPU. It is based on HP’s 0.5µm four-layer-metal CMOS process and uses the same core as its predecessor, the 0.8µm 7100LC. It is designed to offer a lower cost RISC MPU solution for the company’s entry-level servers and workstations and it integrates multimedia functionality.

• Unveiled its 64-bit PA-8000 microprocessor, which uses several advanced execution technologies to deliver more than 360 SPECint92 and 550 SPECfp92. It is fabricated in a 0.5µm, 3.3V CMOS process. The company expects the new chip to appear in systems in 1Q96.

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• Signed a three-year deal with Tower Semiconductor to increase the amount of wafers HP gets from the Israeli foundry.

• Working with AMD to develop low-power, highly integrated ICs for HP’s handheld computers. The chips will be based on either a 386 or 486 core.

• Announced it may not manufacture the 64-bit microprocessor it is jointly developing with Intel, and instead will buy it on the merchant market.

• Launched Tachyon, a gigabit-speed Fibre Channel single-chip controller for networked mass-storage applications.

• Signed an agreement with AT&T Microelectronics to develop and dual-source fiber-optic transceivers for Sonet and ATM applications.

Hughes Electronics

• Announced the change of its corporate name from GM-Hughes Electronics to Hughes Electronics in March 1995.

Digital Semiconductor

• Disclosed the development of a new binary translation and emulation software technology that will enable x86 32-bit applications to run at near native performance on the company’s Alpha RISC microprocessors. The FX!32 technology is expected to be made commercially available in mid-1996.

• Agreed with Toshiba to jointly develop 155M/sec asynchronous transfer mode (ATM) segmentation and reassembly (SAR) devices for the hub/switch and adapter card markets.

• Unveiled the first member of its so called VGC class of PC graphic coprocessors. The DECchip 21130 integrates a GUI accelerator, a video controller, and a RAMDAC to translate digital RGB signals into an analog-monitor feed. The 21130 is Digital’s first graphics/video accelerator to support the PCI bus.

• Jointly developed with Advanced RISC Machines Ltd. the first member in a family of high- performance MPUs compatible with the ARM RISC line. Digital expects to begin volume producing the StrongARM line of 32-bit MPUs in 1H96 using its 0.35µm CMOS 6 process at its fab in Hudson, Massachusetts. StrongARM will be targeted at applications in digital imaging, set-top boxes, multimedia, handheld computers, and communications products.

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• Sold to Motorola its wafer fab in Scotland in early 1995 for $200 million. As part of the deal, Motorola agreed to take on an existing foundry contract for AMD’s Am486 microprocessors, as well as to continue producing Alpha RISC microprocessors for DEC.

Nortel

• Formed a semiconductor foundry joint venture in Shanghai, China, with Philips Semiconductors and various Chinese interests. The new company, called Advanced Semiconductor Manufacturing Corporation (ASMC), is utilizing a fab facility operated by Philips since 1991. The partners plan to install a new 150mm wafer line for processing 0.8µm BiCMOS and 1.0µm CMOS circuits. Upon completion of the upgrade, the fab will have a capacity of about 3,800 wafers per week.

Medtronic Micro-Rel

• Will upgrade its fabrication facility in Tempe, Arizona, from 100mm wafers to 150mm wafers and from 1.5µm to 0.8µm geometries by March 1997.

Westinghouse

• Expanded its GaAs development and production facility by doubling the fabrication space to 10,000 square feet. The facility features a Class 100 cleanroom that will produce chipsets for phased-array radar systems, with particular emphasis on power devices.

• Began shipping the world’s first radiation-hardened 64K EEPROM, the first in a family of devices that will also include 256K and 1M versions that are currently in design.

U.S. MILITARY IC TRENDS

The U.S. military industry continued to take a beating in 1995. As Figure 2-19 shows, defense- related spending and employment reached their highest levels in the mid- to late 1980’s and have continued to steadily decline since then.

U.S. production of military electronics will continue to fall in 1996, the result of ongoing budget cuts and shifts in spending. Fortunately for the military contractors, defense electronics spending is forecast to flatten at about $37 billion dollars from 1996 through 2005 (Figure 2-20). A rise in spending on military communications, navigation, and surveillance programs will compensate for a decline in spending for operations, maintenance, research, and development. Increasing electronic content in advanced military systems will also help balance spending levels.

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National defense spending (based on FY95 constant dollars) 400 7,500 Total defense-related employment 375 7,000

350 6,500

325 6,000

300 5,500

275 5,000

Spending ($B) 250 Employees (Thousands) 4,500 225 4,000 200 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1997 (FCST) Fiscal Years Ending June 30 Source: Department of Defense 20235

Figure 2-19. The Decline Continues

R&D, Test and

50 Evaluation

Procurement 20 Constant 1995 Dollars (Billions)

Operations and Maintenance

0 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 Year Note: 1996-2005 Forecast Source: Electronic Industries Association/ICE, "Status 1996" 19537B

Figure 2-20. DOD Budget Electronic Content Forecast

Unfortunately, the military IC market has not been immune from many of the cutbacks that have been taking place at the Pentagon. Many military IC suppliers have found themselves squeezed between two factors—a steep drop in defense spending, which has hit the semiconductor industry harder than first anticipated, and the growing acceptance of commercial off-the-shelf (COTS)

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electronic components in military systems. It is these two factors that in 4Q94 led AMD and Motorola to announce the termination of their military semiconductor product lines by mid-1996. As part of Motorola’s exit from the market, it sold to Omnirel, Inc. in May 1995 various manufacturing assets, test equipment, and finished goods from its military operation. In November 1995 Altera made its formal announcement to exit the military IC business. It will continue to ship military-grade ICs through 1996.

As the defense budget dwindles, the military will be required to buy more commercial-grade products. The military procurement environment has changed dramatically since Defense Secretary William Perry announced a directive in June of 1994 that orders commercial-grade parts be used whenever possible (Figure 2-21).

Initial directive announcement made in late June 1994.

Perry ordered that all DoD procurement contracts, including those for semiconductors, use commercial and industrial specs and standards where they exist. The use of a mil-spec device will require a waiver. Radiation-hardened components are exempt from the directive. The directive was to be phased-in by January 1, 1995.

Clarifications of and additions to the directive announced in October 1994.

• The action does not eliminate military specifications and standards. • It applies only to actions by the government and does not apply to standards proposed by a bidder in response to an RFQ. • If no commercial alternative exists that is cost effective, then a waiver may be granted. • Military specifications may be used for reprocurement of items already in inventory. • Military specifications may be cited "for guidance only." • A market analysis will be required for every new program to ascertain if commercial products are available. • Non-government standards such as those used by the automotive industry are preferable alternatives.

Source: ICE, "Status 1996" 20237

Figure 2-21. William Perry’s Initiative

Figure 2-22 shows how the military percent of the total semiconductor market has declined in 20 years. In 1975, the military semiconductor market accounted for 17 percent of the total semiconductor market. In 1995, it is estimated to have accounted for barely more than one percent of the total semiconductor market.

Figure 2-23 provides an estimate of the worldwide market for military/aerospace semiconductors in 1995. Digital signal processors (DSPs), field programmable gate arrays (FPGAs), and programmable logic devices (PLDs) are a few of the IC products that are actually showing strong

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potential in the military market. In contrast, discrete and bipolar products will not be as large a share of the market in the future. Older ICs that once were in demand, but do not now require the dedicated support of a “leading-edge” supplier, are given over to companies such as Lansdale Semiconductor, which manufactures and supports discontinued IC products on a continuing basis making it possible to extend the lifecycle of past and present technologies.

160 20 $148

140 17%

120 15

100

80 10

60 7.5% (Billions of Dollars) Semiconductor Market 40 5 Military Percent of Worldwide Worldwide Semiconductor Sales $24 20 1.1% $4.2 $0.7 $1.8 $1.6 0 0 1975 1985 19951995 (EST) = Total Worldwide Semiconductor Market

= Total Worldwide Military/Aerospace Semiconductor Market

Source: TI/ICE, "Status 1996" 18958E

Figure 2-22. Declining Military/Aerospace Presence

Discrete and Optoelectronics 8% Digital Bipolar 8%

MOS Micro Analog 9% 27% 1995 (EST) $1.6B MOS Memory MOS Logic 21% 27%

Source: ICE, "Status 1996" 18537D

Figure 2-23. Worldwide Military/Aerospace Semiconductor Market

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-35 Worldwide IC Vendors

The top ten military/aerospace IC manufacturers and their sales are shown in Figure 2-24. In 1995, many of these military/aerospace vendors were headed in different directions. Grabbing the headlines in 1994 and 1995 were the stories of lessening emphasis or the phasing-out (e.g., Motorola) of military semiconductor businesses. Luckily for military semiconductor users, companies like TI and Intel stated that they were looking to increase their military business by gain- ing marketshare others were leaving behind.

1995 Sales 1995/1994 Military/Aerospace Rank Company 1994 Sales (EST) Percent Change Emphasis

1 Harris 150 145 3 Steady* 2 National 135 135 — Steady 3 TI 135 125 8 Steady/Increasing 4 Analog Devices 128 125 2 Steady 5 Intel 110 100 10 Steady/Increasing 6 LSI Logic 65 62 5 Steady 7 Motorola 50 64 –22 Decreasing 8 Honeywell 40 40 — Steady 9 Raytheon 35 35 — Steady 10 AMD 25 36 –31 Decreasing — Others 177 228 –22 Decreasing Total 1,050 1,095 Ð4 Steady/Decreasing Note: It is estimated that 25% of the Military/Aerospace IC market is for rad-hard devices. *Decreasing Military, increasing Aerospace. Source: ICE, "Status 1996" 12137P

Figure 2-24. Top Ten U.S. Military/Aerospace IC Suppliers ($M)

In general, the military/aerospace market is being influenced by numerous “forces.” Figure 2-25 shows some of the positive and negative influences on the market. Although there are some factors that will positively affect the military semiconductor market in the future, the edict to use commercial ICs whenever possible in military systems will negate these factors. Overall, the U.S. military/aerospace semiconductor market as we now know it is forecast to be no more than about $1.0 billion in the late 1990’s.

JAPANESE IC VENDORS

Japan’s overall economy may continue to resist recovery, but not the country’s semiconductor industry. After several years of struggling to get by, Japan’s semiconductor manufacturers are finally on an upswing. The growth has been attributed to the PC industry’s increasing demand for memory and the global expansion of the communications equipment industry, and even more to continuing strong demand for memory chips, microprocessors, and ASICs in North America and the Asia-Pacific region.

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Negative – Edict to use more commercial ICs in military systems. – Flat military electronics budget. – Increasing use of cheaper plastic packaged devices. Positive + Increasing IC content in military electronic systems. + Increasing rad-hard aerospace market. + End-of-life buys will temporarily increase military IC market (1995-1996).

Source: ICE, "Status 1996" 19539

Figure 2-25. Factors Influencing the Military/Aerospace IC Market

Integrated circuit sales for Japanese companies increased 34 percent in 1995 in terms of U.S. dollars, or 24 percent in terms of Japanese yen (Figure 2-26). This compares to a 1994 increase of 25 percent in dollars or 16 percent in yen. Growth was particularly strong for many of the country’s largest IC producers and somewhat slower for several of the smaller companies.

While Japanese IC manufacturers are investing heavily in 16M and 64M DRAM production, they are at the same time placing a high degree of emphasis on non-memory devices. Development work is very active in data compression chips, networking ICs, and microprocessors for PDAs, high-performance game systems, and other multimedia equipment.

Top Ten Japanese Vendor Highlights

NEC — Wafer Fab Announcements

• Plans to construct a 1G DRAM pilot production line capable of a 0.18µm process at its Sagamihara development fab. The line is scheduled to begin operating in 1H97 with a weekly capacity of about 1,250 200mm wafers.

• Plans to start producing its V800 Series RISC MPUs at its Roseville, California, plant by the end of 1Q96.

• Will build a 0.35µm 200mm wafer line at its Hiroshima fab at a cost of about $580 million. Volume production on the line is expected to begin in May 1996 at which time it will begin ramping up to 2,500 wafers per week. It will be used for the production of 16M and 64M DRAMs, as well as cache SRAMs.

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1994 1995/1994 1995 (EST) 1995 Company Percent Rank MOS Bipolar Total Change MOS Bipolar Total

1 NEC1,2 7,280 575 7,855 41 10,395 650 11,045 2 Hitachi1,2 5,140 795 5,935 45 7,780 850 8,630 3 Toshiba1 5,650 765 6,415 26 7,180 920 8,100 4 Mitsubishi1,2 2,890 395 3,285 43 4,250 440 4,690 5 Fujitsu1,2 2,530 445 2,975 35 3,580 430 4,010 6 Matsushita1,2 1,335 810 2,145 21 1,665 925 2,590 7 Oki2 1,630 35 1,665 22 1,990 40 2,030 8 Sharp 1,465 80 1,545 26 1,860 90 1,950 9 Sanyo1 855 675 1,530 23 1,030 850 1,880 10 Sony 990 485 1,475 27 1,305 570 1,875 11 Seiko Epson1 760 — 760 25 950 — 950 12 Rohm1 235 400 635 37 330 540 870 13 KTI Semiconductor 365 — 365 37 500 — 500 14 Nippon Steel 305 — 305 54 470 — 470 15 Yamaha 325 — 325 18 385 — 385 16 Ricoh1 295 — 295 20 355 — 355 17 Asahi Kasei Microsystems 215 — 215 40 300 — 300 18 Seiko Instruments 210 — 210 14 240 — 240 19 Fuji Electric1 130 45 175 17 150 55 205 20 Kawasaki Steel 110 — 110 64 180 — 180 Others 295 75 370 30 385 95 480 Total 33,010 5,580 38,590 34 45,280 6,455 51,735 1994: 102¥ = $1.00 1995: 94´=$1.00 1BiCMOS ICs included under MOS. 2GaAs ICs included under MOS. Source: ICE, "Status 1996" 20455

Figure 2-26. Japanese Companies’ IC Sales (Calendar Year, $M)

• May begin building a new wafer fabrication site in the U.S. as early as 2H96. The facility will most likely produce 0.25µm 200mm wafers and start operations in 1998. Possible locations for the fab include Oregon and Arizona.

• Announced in June 1995 that it would commence work on a new ASIC fab in Tsuruoka, Yamagata Prefecture, with operations to start in 1998. The 200mm wafer fab had originally been slated to begin operations in 1993, but plans were put on hold during the Japanese economic slowdown in the early 1990’s.

• Converting its GaAs wafer fab in Otsu, Shiga Prefecture, from 3-inch wafers to 100mm wafers.

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• Will install a 0.25µm process line at its Kyushu fab in Kumamoto, Japan, for the mass production of 256M DRAMs. The installation will begin in 1997 with operations starting in 1998 and volume production in 1999. With the new line, capacity at the plant ultimately will reach 15,000 200mm wafers per week.

NEC — Key Agreements

• Licensed the ARM RISC microprocessor core of Advanced RISC Machines. NEC has the right to develop, manufacture, and market ASICs based on the 32-bit ARM7 RISC microprocessor core.

• Will transfer 0.8µm processing technology to Shougang NEC Electronics Co., a joint venture it established in Beijing, China, with a local steel company in 1991. The process will be used to initially produce 8-bit MCUs for consumer electronics products. NEC will also expand Shougang NEC’s 150mm wafer output to 1,250 units per week by June 1996 and further to 2,000 per week by 1997.

• Agreed with AT&T to extend their cooperative ASIC process development to the 0.25µm level. The partners plan to have a prototype 0.25µm logic chip ready by mid-1996.

• Reached a deal with Samsung under which NEC is supplying Samsung with up to 25,000 4M DRAM wafers made by NEC Semiconductors U.K. Samsung assembles the ICs at its back- end plant in Portugal and provides them to European PC makers. The deal will probably be expanded to the 16M level in the future.

• Invested $2 million in flash memory developer SanDisk Corporation for about a one percent ownership in the company. The move comes after an agreement the companies made in 1994 to manufacture 256M flash devices in 1997 using NEC’s 0.35µm process technology.

NEC — Product Briefs

• Expects to begin producing 0.35µm ASICs in volume by 2Q96. Using the company’s CMOS- 9 technology, the initial devices will operate at 3.3 volts and will feature up to two million usable gates. CMOS-9 is based on the same 0.35µm process NEC uses for its 64M DRAMs. The company’s fab in Kyushu, Japan, will be the first to produce the ASICs, followed by its plant in Roseville, California, at a later date.

• Developed a high-speed 0.44µm BiCMOS gate array family (QB8 Family) that is said to operate as fast as 0.35µm CMOS gate arrays and yet feature low power consumption.

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• Abandoning burst-EDO DRAM development to concentrate instead on synchronous DRAMs for Pentium systems without level-two cache.

• Introduced its new CMOS-8LHD 0.5µm high-density ASIC technology that allows for the creation of ASICs with densities ranging from 75,000 to 1,123,000 raw gates (or a maximum of about 674,000 usable gates). The CMOS-8LHD family uses Silicon Architects’ Cell-Based Array (CBA) technology.

• Announced the availability of a highly integrated cell-based ASIC that is to be used as a development vehicle in designing high-end graphics systems. Developed in conjunction with Rambus Inc., the Rambus Unified Graphics Back End (Rugbe) chip incorporates a 170MHz, 27-bit RAMDAC cell and a pair of Rambus channels connecting two 16M Rambus DRAMs (RDRAMs), allowing for up to 1-Gigabyte-per-second raw frame-buffer bandwidth. Rugbe also comes with a PCI interface compatible with 32-bit or 64-bit bus structures and other analog functions found in many sophisticated graphics controllers.

• Unveiled a 4-bit microcontroller with built-in flash memory that operates on 1.8 volts. The chip is intended for use in automotive keyless entry systems.

• Added synchronous graphics RAM (SGRAM) chips to its portfolio, with the introduction of an 8M part. It is manufactured on a 0.45µm CMOS process and operates at speeds of up to 100MHz.

• Became among the first to develop a 1G DRAM. The chip uses a 2.0- to 2.5-volt, 0.25µm CMOS process and is expected to be sampled in 1998.

• Presented two 1M BiCMOS synchronous cache SRAMs with operating speeds as fast as 3ns. They are designed for use as buffer memory in RISC-based workstations.

• Began shipping samples of MPUs using Mips’ R10000 RISC technology in 2H95. The chip features a clock speed of 200MHz and provides an estimated integer and floating point performance of 300spec and 600spec, respectively. NEC also announced the sample availability of a 250MHz R4400 designed using a 0.35µm process.

Hitachi — Wafer Fab Announcements

• Purchased the M1 125mm wafer line located at Nippon Steel Semiconductor’s Tateyama plant. Nippon Steel had been using the line to process 1.2-1.0µm CMOS MPUs and sound ICs for Sony and Oki.

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• Started building a 0.3µm line for 64M DRAM production at its site in Nakakoma, Japan, at a cost of about $850 million.

• Launched mass production of microcontrollers at its German fab in December 1995. The MCUs are the first non-memory devices to be produced in the fab. It was producing only 16M DRAMs in volume.

• Plans to invest about $400 million to add a microprocessor production facility at its Irving, Texas-based fab. The plant will initially manufacture the MPUs using a 0.5µm process on 150mm wafers, but it will have the capability of being converted to a 0.35µm process on 200mm wafers. Operations are scheduled to start in April 1997.

Hitachi — Key Agreements

• Broadened its licensing and manufacturing partnership with Ramtron to non-standard as well as standard ferroelectric RAM (FRAM) products.

• Licensed CompCore Multimedia’s MPEG-2 engine, which will be used as the basis for development of decoder ICs. The first MPEG-2 devices will be sampled in early 1996. Hitachi and CompCore will also pursue MPEG software development and other projects still under definition.

• Codeveloping with VLSI Technology a 0.4µm, five-layer-metal CMOS ASIC design process with an unusually tight metal pitch of 1.4 microns. The companies claim the process will allow for devices that are 30 percent denser than competing processes for cell-based designs. Prototypes are expected to be produced before the end of 1995.

Hitachi — Product Briefs

• Unveiled a 6ns, 1M (32K x 36) synchronous SRAM that supports high-end workstation designs with RISC-based microprocessors running at 167MHz clock speeds. Hitachi also introduced an 8ns 1M synchronous burst SRAM to meet Pentium level-two cache demand.

• Began selling FPGAs based on Crosspoint Solutions Inc.’s one-time-programmable architecture in the Japanese market in October 1995. Hitachi will develop libraries for the FPGAs for customers who wish to convert from Crosspoint FPGAs to Hitachi’s larger gate arrays.

• Brought out a new low-power, high-speed 256K EEPROM that the company says will increase battery life, especially in digital cellular phones. The operating voltage of the 0.8µm CMOS device may range from 2.7V to 5.5V.

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• Rolled out its second-generation digital camera chipset that uses only four devices versus the six-device original generation. The new chipset integrates the timing generator and the D/A converter into the digital signal processor.

• Introduced its MicroCore series of cell-based ASICs that can incorporate a variety of cells, including an SH-1 series 32-bit RISC microcontroller core, and up to 250,000 user-defined logic gates.

• Rolled out two 16M synchronous DRAMs it hopes will edge out EDO DRAMs for PC main memory applications by the end of 1996. The 0.5µm chips operate at 3.3V and support data transfer rates of up to 100Mbytes/sec. Hitachi also began shipping samples of an 8M synchronous graphics RAM (SGRAM) that supports data transfer rates of up to 400Mbytes/sec.

• Became among the first to develop a 1G DRAM. The chip was designed using a 0.16µm CMOS process and runs from a 1.5V supply. Sample shipment is slated for 1998.

Toshiba — Wafer Fab Announcements

• Announced it will build its first overseas wafer fabrication facility. Toshiba will join IBM in constructing a $1.2 billion 64M DRAM facility in Manassas, Virginia. The facility will be equally shared by the partners and will have its own identity. It will be ready for volume production in late 1997 or early 1998 and will ramp to 6,750 200mm wafers per week.

Toshiba — Key Agreements

• Negotiating with Winbond to license its 16M and 64M DRAM technology to the Taiwanese company. As part of the agreement, Toshiba is expected to use Winbond as a foundry for a portion of its DRAM capacity. The DRAMs would be manufactured in Winbond’s Fab 3 facility, which is under construction and will be completed in 1997. Additionally, Winbond will likely gain the right to market the DRAMs under its own logo.

• Agreed with Digital Equipment Corporation to jointly develop 155M/sec asynchronous transfer mode (ATM) segmentation and reassembly (SAR) devices for the hub/switch and adapter card markets.

• Signed on with Ramtron to jointly develop and manufacture ferroelectric RAMs (FRAMs) in densities of 256K and above. Toshiba will have the right to make and sell the devices under its own brand name, and the company will serve as a foundry for Ramtron.

• Extended its 1992 flash memory alliance with Samsung for joint development of 64M NAND flash memories utilizing 0.4µm CMOS technology. Sample shipments will begin in the spring of 1996.

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• Licensed the Cell-Based Array (CBA) ASIC architecture technology of design house Silicon Architects.

• Licensed some of its older 1M DRAM technology to China Huajing Electronics Group Corp. Toshiba and China Huajing also established a joint venture in China to develop and market ICs.

Toshiba — Product Briefs

• Introduced its TC220 Series of gate array, embedded array, and standard cell ASICs that offer up to 1.9 million usable gates (three million maximum). Based on 0.3µm CMOS process technology, the chips offer approximately 40 percent lower power consumption than their pre- decessors.

• Started volume production of 4M and 16M EDO (extended data out) DRAMs.

• Announced its line of mixed 3V/5V ASICs dubbed the TC203 family. The devices are based on 0.4µm double-layer or triple-layer metal CMOS technology.

• Along with its partners IBM and Siemens, claimed to have developed their 256M DRAM, touted as the smallest and fastest fully functional device for its density yet produced. The 0.25µm device took $1 billion and more than two years to develop.

• Introduced the 32-bit R3900 Mips RISC processor core, which the company says achieves R4000-class performance. The R3900 is targeted at the emerging PDA terminal, set-top box, graphics, and multimedia markets in the U.S.

• Rolled out a 0.5µm Rambus ASIC cell (RAC) designed to link a microprocessor with a Rambus DRAM (RDRAM) channel in high-end workstation environments.

• Began production of 1M synchronous burst SRAMs with access times as fast as 8ns. The unusual thing about the chips is that they use 0.5µm CMOS process technology instead of the BiCMOS seen in most first-generation synch-burst SRAMs.

Mitsubishi — Wafer Fab Announcements

• Will begin building a $1 billion 256M DRAM production facility at its Kochi, Japan, site in 1998. The plant is expected to initially produce 64M DRAMs by the year 2000. Mitsubishi is also planning to construct a 256M DRAM facility at its fab in North Carolina.

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• Will spend $1.1 billion on a new 64M DRAM processing line in an existing building at its Saijo, Japan, fab facility. Construction will begin in 1996, with initial production starting in late 1997 or early 1998, depending on the demand for 64M DRAMs.

• Investing $305 million in its plant in Alsdorf, Germany, to enable it to fabricate 16M DRAMs. The plant was established in 1989 and has since engaged in the assembly and testing of 4M DRAMs. The added equipment will also allow for the manufacture of microcontrollers and ASICs.

Mitsubishi — Product Briefs

• Will mass produce high-speed synchronous DRAMs starting in April 1996. The company will sample a 200MHz chip early in 1996.

• Has developed an MPEG-2 chipset that includes a pixel processor chip featuring five billion operations per second processing capability, a controller IC for controlling the processor, a motion detection engine, and a frame memory chip.

• Developed a 1M synchronous burst SRAM, that operates on 3.3V and runs at up to 75MHz.

• Began sampling 4M and 16M Extended Data Out (EDO) DRAMs. It has said it will also provide 16M burst EDO DRAMs starting in 1996.

Fujitsu — Wafer Fab Announcements

• Will add a second fab to its Fujitsu-AMD Semiconductor Ltd. joint venture with AMD in Japan. The new fab will roughly double the site’s wafer capacity. Initial production will begin in late 1997 at the 0.35µm level.

• Investing about $1.2 billion to expand its Durham, United Kingdom, fabrication facility over the next four years. Construction of a 200mm wafer plant started in December 1995 and production of DRAMs will start in 1H97. When fully operational in 1998, the facility will have a weekly output capacity of 7,500 wafers.

• Will expand its Gresham, Oregon, fab facility by adding a new $1 billion plant. The facility will begin making 16M DRAMs in January 1997 and 64M DRAMs at a later date. Capacity will reach about 7,500 200mm wafers per week.

• Converting its 150mm wafer pilot line at its Mie plant to a 200mm wafer mass production line for 16M and 64M DRAMs.

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• Seeking to establish a manufacturing facility in China by 1997 for the production of 8-bit microcontrollers and consumer linear ICs using 1.0µm process technology. The plant may also manufacture DRAMs.

Fujitsu — Key Agreements

• May enter into an FRAM development pact with Ramtron. Upon completion of a feasibili- ty study by the two companies, development of a 1M FRAM is planned to begin, followed by a move toward development of a 16M device. Fujitsu will be entitled to sell FRAMs under its own name and will OEM-supply products to Ramtron.

• Provided China’s second largest IC maker Huayue Microelectronics with bipolar consumer IC processing technology. Fujitsu will also help Huayue convert its fab from 100mm wafers to 125mm wafers.

• Agreed with Hyundai to jointly develop 64M DRAMs. They have had a cooperative relationship through the OEM supply of 4M and 16M DRAMs since 1993.

• Licensed the Cell-Based Array (CBA) ASIC architecture technology of design house Silicon Architects.

Fujitsu — Product Briefs

• Will withdraw from the mask ROM business. Development efforts for 32M and future generation ROMs has been canceled and Fujitsu will stop producing and shipping its current line of 16M and smaller products in 1996.

• Announced a new “low-end” 5-volt, submicron ASIC family that features up to 89,000 usable gates in a sea-of-gates architecture and low power consumption. The CG46/CE46 series is based on 0.65µm CMOS technology.

• Started producing ASICs with 0.35µm geometries in late 1995. The chips are fabricated on a new 200mm wafer line the company completed at its plant in Wakamatsu, Japan.

Matsushita — Wafer Fab Announcements

• Upgraded its Washington-based fabrication facility from 0.8µm lines to 0.6µm lines and increased the plant 150mm wafer processing capacity to about 5,000 units per week in an attempt to boost 1M and 4M DRAM and MCU production.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-45 Worldwide IC Vendors

• Constructing a 0.35µm, 200mm wafer plant at its site in Tonami, Japan, that is slated for operation by 2Q96. The new line will process 16M and 64M DRAMs, microcontrollers, and ASICs on 2,500 wafers per week. Capacity is expected to then be doubled in 1997.

Matsushita — Key Agreements

• Licensed 3DO’s 64-bit M2 graphics acceleration technology. 3DO will provide Matsushita with all M2-related custom ASICs, reference designs for CD and digital video disc (DVD) systems, MPEG-1 and MPEG-2 decoders, operating system software, and hardware and software development systems.

• Jointly developed with SanDisk Corporation, a 32M flash memory device. The chip was designed using a 0.5µm, three-layer metal CMOS process and operates on a single 3.3V or 5V power supply. Matsushita will supply SanDisk with all flash memories it manufactures.

Matsushita — Product Briefs

• Introduced a low-power, 3.3V programmable 32-bit microcontroller for image processing and other multimedia applications. The 100 MIPS part is Matsushita’s first 32-bit MCU and the first controller to be based on its 0.35µm, triple-layer-metal CMOS process.

• Started shipping samples of a 16-bit microcontroller with 64K of built-in 3V flash memory. The IC is implemented in a 0.8µm, two-layer metal CMOS process. Samples of an 8-bit version also started shipping.

Oki — Wafer Fab Announcements

• Will invest approximately $700 million to build a DRAM production facility in Oregon, where it currently assembles DRAMs. The plant is to be equipped with 0.35µm CMOS process lines and will be capable of running 5,000 200mm wafers per week for use in 16M and 64M DRAM production.

• Completed construction of a $800 million wafer fab in Miyagi, Japan, for the production of 16M DRAMs and advanced ASICs. The fab has the capacity to process 3,750 200mm wafers per week, but initially started running 1,250 wafers per week in late 1995. The plant is capable of manufacturing 64M DRAMs.

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Oki — Key Agreements

• Broadened its DRAM technology transfer agreement with Taiwan’s Nan Ya Plastics to include 64M DRAM process technology. Nan Ya is scheduled to launch the production of 16M DRAMs based on Oki technology in 2H96 and will likely begin producing 64M devices in 1998.

• Entered an agreement with design house Mosaid Technologies of Ontario, Canada, to jointly develop a 64M synchronous DRAM. Oki expects to start sampling the SDRAMs by mid- 1996, about the same time it plans to ramp up its standard 64M DRAMs.

Oki — Product Briefs

• Announced its QuickCore line of application-specific 8-bit microcontrollers. QuickCore chips can include one of Oki’s two nX65K series of microcontroller cores along with pre-char- acterized peripheral functions and user-defined functions with memory, user-defined logic, and various macrocells. The chips are designed using an ASIC environment.

• Unveiled a family of audio ICs that provide either stand-alone or computer-controlled speech synthesis. With up to 2M of internal mask ROM for sound playback, the chips can store as many as 127 phrases.

• Began marketing a line of low-power 3-volt GaAs RF ICs that operate in the 850MHz-2.4GHz frequency range for wireless voice and data communications.

Sharp — Wafer Fab Announcements

• Installing a 0.35µm to 0.4µm process line at its Fukuyama plant in Hiroshima Prefecture by the spring of 1996 in order to expand flash memory and mask ROM production. The new line will produce over 2,500 200mm wafers per week.

Sharp — Key Agreements

• Signed a pact with Quality Semiconductor to second-source and jointly develop application- specific FIFOs. The agreement called for the two to immediately start reselling each other’s products and begin work on developing specialty FIFOs tooled for high-bandwidth applications.

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Sharp — Product Briefs

• Built a prototype 256K ferroelectric memory chip using a 0.6µm process incorporating PZT ferroelectric material for the capacitor dielectric. Sharp plans to extend the technology to 1M DRAMs.

• Started mass production of 64M mask ROMs. Sharp also introduced a 32M mask ROM featuring an industry-leading access time of 100ns.

• Added to its family of 8M and 16M flash memories, devices with 2M and 4M densities. Sharp also OEM-supplies 16M flash memories to Intel.

• Rolled out its first ASSP based on Advanced RISC Machines’ ARM7DI microprocessor core. The ASSP includes on-chip a monochrome LCD controller, a serial data infrared transceiver, SRAM optimized for real-time interrupt, and pulse-width modulators for LCD gain- and contrast-control.

Sanyo — Wafer Fab Announcements

• Expanded production capacity at its fab in Niigata, Japan, in order to triple its flash memory output by the end of 1995.

Sanyo — Product Briefs

• Started sampling 1M and 2M EDO (extended data out) DRAMs. The ICs are being targeted at applications in hard-disk and CD-ROM drives.

• Introduced an 8-bit microcontroller with 136K of on-chip flash memory for use in memory cards, PCs, and game machines.

Sanyo — Other Noteworthy News

• Restructured its LSI Division into market-specific units. Under the new structure, the MOS LSI Division is in charge of industrial equipment semiconductors and the Bipolar LSI Division handles consumer electronics semiconductors.

Sony — Wafer Fab Announcements

• Boosting its high-speed SRAM and ASIC production capabilities by installing 0.35µm fabrication lines at its fabs in San Antonio, Texas, and Nagasaki, Japan. The new lines were expected to be installed by the end of 1995 and are scheduled to become operational in 1996.

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Sony — Product Briefs

• Began marketing two MPEG-1-compliant real-time encoders, one for video CD applications and the other for VOD (video-on-demand) video servers. The chips support 1.5Mbytes/sec and 2-3Mbytes/sec data transfer rates, respectively.

Sony — Other Noteworthy News

• Moved to strengthen its U.S. semiconductor business by forming Sony Semiconductor Company of America. Based in San Jose, California, the new organization is seeking to establish itself as a self-sufficient U.S. semiconductor operation by creating new business opportunities in the U.S., as well as by expanding its current business.

EUROPEAN IC VENDORS

Figure 2-27 displays IC sales for the leading European IC companies in 1994 and 1995. On average, sales by these companies grew 35 percent in 1995, following 30 percent growth in the previous year. The growth was driven primarily by strong demand for PCs in Europe, but also by fast- growing demand for digital mobile phones and other telecommunications equipment, and automotive electronics.

SGS-Thomson is focusing mostly on high-growth applications and on high-margin products— particularly focusing on areas such as multimedia, mobile phones, computers, and automotive electronics. Its strongest performing IC products in 1995 were SRAMs, flash memories, micro- components (MPUs, MCUs, MPRs, and DSPs), standard cell ASICs, and analog ICs.

Having survived a couple of years of heavy restructuring, Philips Semiconductors is now in a much better position to compete with the world leaders in the IC industry. Philips is working hard to be among the world’s top ten semiconductor companies in the near future. The company aims to maintain its dominant position in consumer electronics-related products, while becoming an established leader in the digital communications and multimedia markets. The company has, therefore, chosen microcontrollers and standard high-performance logic devices as two areas of focus. Philips is already among the leaders in 8-bit MCUs, and it intends to become an equally serious player in 16-bit parts.

Siemens’ IC group focuses on four strategic product areas: memories, microcontrollers, chip cards, and communications ICs. As Europe’s only DRAM producer, the company plans to be among the top ten DRAM leaders in the world within the next few years; it is currently within the top 15. Siemens’ efforts in microcontrollers are targeted at applications in the industrial and automotive markets. In communications ICs, the company claims to be the second largest supplier after AT&T.

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1994 1995/1994 1995 (EST) 1995 Company Percent Rank MOS Bipolar Total Change MOS Bipolar Total

1 SGS-Thomson1 1,406 801 2,207 34 1,827 1,120 2,947 2 Philips1,2 1,036 1,070 2,106 35 1,525 1,325 2,850 3 Siemens 1,424 160 1,584 48 2,190 160 2,350 4 Temic 330 135 465 15 370 170 540 Telefunken 24 125 149 31 35 160 195 Matra MHS1 135 — 135 7 145 — 145 ITT Semiconductors3 110 10 120 4 115 10 125 Siliconix 34 — 34 24 42 — 42 Dialog4 27 — 27 22 33 — 33 5 GEC Plessey 137 182 319 27 405 — 405 6 Ericsson 240 — 240 25 300 — 300 7 Robert Bosch1,5 225 — 225 4 235 — 235 8 Alcatel Mietec 163 — 163 10 180 — 180 9 Austria Mikro Systeme 95 — 95 84 175 — 175 10 EM Microelectronic 65 — 65 29 84 — 84 11 Atmel ES2 40 — 40 50 60 — 60 12 Thesys Microelectronics 33 — 33 58 52 — 52 13 ZMD 30 — 30 67 50 — 50 14 SMI — 29 29 55 — 45 45 15 Thomson Microwave 36 — 36 22 44 — 44 16 Micronas1 20 — 20 100 40 — 40 17 Elex 20 — 20 70 34 — 34 Others 85 18 103 20 104 20 124 Total 5,385 2,395 7,780 35 7,675 2,840 10,515 1BiCMOS ICs included under MOS. 2GaAs ICs included under MOS. 3Acquired by Temic in 4Q95. 4Fabless IC supplier. 5Captive IC manufacturer. Source: ICE, "Status 1996" 11064Z

Figure 2-27. European Companies’ IC Sales ($M)

Top Ten European Vendor Highlights

SGS-Thomson — Wafer Fab Announcements

• Will build its fourth 200mm wafer fabrication facility in Rousset, France, at the site of an existing 125mm wafer plant. Construction will begin on the $800 million plant in 1Q96, and first silicon is expected by early 1998. The line will have a capacity of 5,000 wafers per week and the capability to process devices with 0.5µm, 0.35µm, and finer geometries.

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SGS-Thomson — Key Agreements

• Teaming with Motorola to develop a chipset for the emerging V.34 28.8K/sec modem market. The chipset combines Motorola’s 68356 microprocessor, SGS-Thomson’s ST544 codec, and the software required to support V.34 data pump functions.

• Signed a licensing agreement with Robert Bosch GmbH of Germany that grants Bosch the right to develop and manufacture smart power ICs using the latest generation Bipolar- CMOS-DMOS (BCD) process from SGS-Thomson. The agreement also covers future generations of BCD products. Bosch will manufacture the devices at its new 150mm wafer production facility in Reutlingen, Germany.

• Agreed to give Western Digital access to its 0.7µm CMOS process capacity through the end of 1997. SGS-Thomson will produce Western Digital’s disk controller and PCI-SCSI devices, as well as future products. The process will migrate down to the 0.5µm level by the end of 1995.

SGS-Thomson — Product Briefs

• Announced the ST20450 RISC microprocessor, the first standard product based on its ST20 micro core technology. The chip contains a 40 MIPS RISC core, a programmable memory interface, a hardware microkernal, and four high-speed serial communications links.

• Added the clock-tripled (100MHz) ST486DX4 family to its range of x86 microprocessors. The devices are based on a new proprietary 0.35µm HCMOS process with a low supply voltage of 3.45V. This new technology has also been applied to its ST486DX2 clock-doubled MPU line.

• Rolled out an enhanced 64K parallel EEPROM that features access times as low as 100ns and a programming cycle time of 2ms for a 64-byte page. STM continued the expansion of its 64K family with introduction of a low voltage device (3V).

• Introduced a family of single-chip MPEG decoder ICs suitable for video CD products, PC multimedia, and digital TV applications. The chip has the capability to decode MPEG-1 video, MPEG-2 video, and MPEG/Musicam audio.

Philips — Key Agreements

• Licensed the Mips R4000 RISC microprocessor core from Silicon Graphics Inc. for use in its next-generation CD-i player and other Philips consumer electronic products under development. The company gained access to the R3000 core when it acquired HDL Systems in 1994.

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• Purchased the multimedia IC business of Western Digital. The acquisition includes the Paradise graphics-accelerator cards and the RocketChip family of ICs, which will enable Philips to enter the growing 3D graphics market.

• Will aid Ashtech Inc. of Sunnyvale, California, in developing a Global Positioning System (GPS) chipset, which will be targeted at OEMs with little or no experience in GPS technology. The chipset is scheduled to go into production in 2H96.

• Expanded its long-standing agreement with Texas Instruments on standard logic devices with plans to add a new Advanced Low-Voltage CMOS family of 3.3V parts.

• Formed a semiconductor foundry joint venture in Shanghai, China, with Nortel (Northern Telecom) and various Chinese interests. The new company, called Advanced Semiconductor Manufacturing Corporation (ASMC), is utilizing a fab facility operated by Philips since 1991. The partners plan to install a new 150mm wafer line for processing 0.8µm BiCMOS and 1.0µm CMOS circuits. Upon completion of the upgrade, the fab will have a capacity of about 3,800 wafers per week.

• Agreed with IBM Microelectronics to form a joint venture to manufacture ICs at IBM’s fab facility in Boeblingen Hulb, Germany. The new company, called SubMicron Semiconductor Technologies GmbH (SMST), is held 51 percent by Philips and 49 percent by IBM. SMST is supplying products solely to Philips and IBM, manufacturing 4M DRAMs for IBM and 0.8µm logic ICs for Philips. The two companies are also discussing the possibility of further technology cooperation.

• Negotiating with TriQuint Semiconductor about taking an equity position in the GaAs IC manufacturer or signing a long-term deal with the company for the foundry supply of GaAs ICs.

Philips — Product Briefs

• Developed a new multimedia digital signal processor, called the TriMedia processor, that handles 2.5-billion operations per second, can handle a real-time mix of audio, video, and graphics, and is priced at consumer levels. Philips says the performance and price break- through is enabled by the use of a proprietary very long instruction word (VLIW) architecture. The company hopes to enter volume production of the chip in late 1996 or early 1997.

Siemens — Wafer Fab Announcements

• Announced plans to build a $1.5 billion DRAM fab in the United States in partnership with Motorola. The location of the fab site was to be selected by the end of 1995.

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• Recently broke ground on a new $1.8 billion fab facility in Newcastle, United Kingdom, for the production of ASICs and other logic devices. First production at the fab is expected to take place in the summer of 1997.

• Announced a $350 million investment in its fab in Villach, Austria, which will expand it into a center for high-performance power devices used in industrial and automotive applications.

• Spending $215 million to increase the production capacity of its fabrication facility in Regensburg, Germany, in order to meet demand for its memory products. The addition features over 43,000 square feet of cleanroom area where primarily 1M and 4M DRAMs will be produced. Upon completion, the plant’s capacity will increase to 10,000 150mm wafer starts per week.

Siemens — Key Agreements

• Announced an agreement with Wind River Systems to port Wind River’s VxWorks real-time operating system and WindPower tools to Siemens’ C166 family of 16-bit embedded microcontrollers. The tools and operating system are targeted at high-volume, cost-sensitive markets, especially automotive, telecommunications, and office automation.

• Along with its partners IBM and Toshiba, claimed to have developed their 256M DRAM, touted as the smallest and fastest fully functional device for its density yet produced. The 0.25µm device took $1 billion and more than two years to develop.

• Signed a second-source agreement with start-up MoSys Inc. concerning MoSys’ high-speed memory technology. Under terms of the pact, Siemens will sell MoSys’ Multibank DRAMs (MDRAM) under its own name and will also furnish the parts to MoSys. Siemens was also given the right to develop MDRAM derivatives.

• Forged an agreement with Zoran Corporation allowing Siemens to market its compression ICs under the Siemens label. The deal covers several new Zoran ICs, including an MPEG-1 decoder, Dolby AC-3 audio decoders, and multimedia controllers, in addition to a motion JPEG chipset.

• Licensed the TrueSpeech compression technology of DSP Group Inc. for multimedia and computer-technology applications.

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Siemens — Product Briefs

• Entered the merchant asynchronous transfer mode (ATM) market with its ATMiX family of products. The first three devices are a 155M/sec SONET transceiver for fiber optics, a 52M/sec and 25M/sec unshielded twisted-pair transceiver, and a segmentation and reassembly (SAR) chip. Siemens’ first two generations of ATM devices were used internally.

• Began sampling a faster derivative of its C167 16-bit MCU family that runs at 50MHz (25MHz internally) and is targeted at applications such as disk drives, scanners, and antilock brake systems.

Temic — Key Agreements

• Acquired ITT Semiconductors in Freiberg, Germany. The purchase provides Temic with digital and mixed-signal ICs for TV receivers and multimedia consumer electronics; control and sensing devices in automotive and industrial applications; and discrete semiconductors.

• Licensed DSP Group’s Pine and Oak DSP cores. Initial products based on the Pine core were made by Matra MHS in 1995, and products based on the Oak core at a later date. They will first be used in specific applications of the communications market, but will progressively be made available for all Temic customers.

Temic — Product Briefs

• Released a new chipset for digital cordless telephones supporting the CT2 standard. The set consists of four ICs representing the complete RF part of the telephone and a highly integrated CT2 controller from AMD.

• Expects to be the first to bring a silicon-germanium (SiGe) IC to the commercial market. Samples of an analog RF IC were scheduled to be shipped in 2H95 with volume shipments to follow in 1H96. The SiGe chips are based on a heterobipolar transistor (HBT) structure and are manufactured by Temic subsidiary Telefunken Semiconductors.

• Launched a family of Sparc-based 32-bit RISC microcontrollers through its Matra MHS subsidiary. Called the Sparclet, the chip combines a RISC/DSP core with a selection of on-chip peripheral circuits optimized for applications in advanced communications systems such as digital cellular telephone base stations, ISDN terminals, and video-on-demand systems. The device is fabricated on a 0.6µm, triple-layer metal CMOS process.

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• Introduced a data link controller complying with the Vehicle Area Network (VAN) protocol that can interface directly to a wide range of microcontrollers. The chip can also be used in Controller Area Network (CAN) sockets. The IC is manufactured by Matra MHS.

GEC Plessey — Product Briefs

• Entered the market for off-the-shelf communications microcontrollers by launching a family of ARM core-based MCUs targeted at the low-power networking applications market. The devices incorporate the ARM7 32-bit RISC core and are manufactured in GEC Plessey’s 0.7µm CMOS process at its Plymouth, United Kingdom, fab.

Alcatel Mietec — Product Briefs

• Added microcontroller technology to its mixed-signal standard cell library through a licensing deal with Norwegian design house Nordic VLSI. Initially, an 8-bit version of Nordic’s µRISC core will be offered, but there are plans to extend the architecture to 16 and 32 bits by 1997.

Austria Mikro Systeme — Key Agreements

• Acquired a 51 percent controlling interest in SAMES Ltd., a South African IC manufacturer. SAMES has a 150mm wafer fab that is geared to build ASICs and provide foundry capacity for CMOS and BiCMOS technology at the 2.0µm, 1.2µm, and 1.0µm levels. The agreement includes technology transfer from AMS to SAMES and the sharing of process technology.

• Purchased a 51 percent stake in Thesys Microelectronics. Under the deal, Thesys and AMS will continue to operate separately but will cooperate on product development. While AMS gains access to potential additional fab capacity, both companies stand to benefit from each other’s expertise in CMOS and BiCMOS technologies.

Austria Mikro Systeme — Product Briefs

• Introduced a 0.8µm mixed-signal BiCMOS process for telecommunications ASICs. The 2.5GHz process is suitable for processing highly integrated circuits for GSM, wireless LAN, and similar RF communications systems.

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REST-OF-WORLD (ROW) IC VENDORS

Many ROW nations have in recent years undertaken major efforts to establish competitive semiconductor industries. This has especially been the case for the rapidly developing countries in the Asia-Pacific region (excluding Japan). One of the main driving forces behind these efforts is the desire many of these countries have to build self-contained electronics industries.

Korean IC Vendors

Korea has grown into a memory chip manufacturing powerhouse in a very short time. Aided by unceasing demand for DRAMs, Korean IC companies continue to watch their sales break records (Figure 2-28). On average, the three main Korean companies, Samsung, LG Semicon (formerly Goldstar Electron), and Hyundai experienced 70 percent growth in their sales of ICs in 1994 and 1995.

1994 1995/1994 1995 (EST) Rank Company Percent MOS Bipolar Total Change MOS Bipolar Total

1 Samsung1 4,815 — 4,815 70 8,182 — 8,182

2 LG Semicon 1,750 50 1,800 83 3,200 100 3,300

3 Hyundai 1,750 — 1,750 71 3,000 — 3,000

— Others 265 60 325 4 338 — 338

Total 8,580 110 8,690 70 14,720 100 14,820

1GaAs ICs included under MOS. Source: ICE, "Status 1996" 11725V

Figure 2-28. Korean Companies’ IC Sales ($M)

On the downside, the Koreans have become highly dependent on the DRAM market, which has traditionally been very volatile. In fact, DRAMs accounted for more than 80 percent of their IC sales in 1995. However, they are working to lessen that dependence through alliances with and investments in companies that have strengths in other areas. A prime example is Hyundai’s early 1995 purchase of the NCR Microelectronic Products Division of AT&T Global Information Solutions, a subsidiary of AT&T Corporation. The newly acquired business, now called Symbios Logic, gives Hyundai a strong presence in the North American ASIC and ASSP markets.

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Korean Vendor Highlights

Samsung — Wafer Fab Announcements

• Plans to build its first U.S.-based fab in Austin, Texas. The new $1.35 billion plant will use 200mm wafers and begin producing DRAMs and logic chips with 0.35µm features. It will be capable of production at the 0.25µm level. Production is hoped to start in 1998.

• Broke ground for a new 64M DRAM fab in Kiheung, South Korea, that is expected to cost about $1.5 billion. Maximum weekly capacity will be 10,000 200mm wafers.

• Shifting 8,750 wafers per week of 0.6µm CMOS production from 4M DRAMs to ASICs to meet demand from fabless companies.

Samsung — Key Agreements

• Licensed the 16-bit microcontroller architecture of NEC, providing Samsung with its first products in the 16-bit market segment. Samsung plans to sell $1 billion worth of MCUs by the end of the decade.

• Named Florida-based Chip Supply Inc. as a distributor and value-added dealer for its unpackaged semiconductors. The first available Samsung bare dice will be 1M and 4M SRAMs.

• Signed on as a second source for NexGen’s PCI-based Nx586 chipsets.

• Made an agreement with Weitek that will provide a foundry source for Weitek’s graphics chips plus any jointly developed devices.

• Invested $4 million in video compression chip supplier Array Microsystems (Los Gatos, California). The companies also entered a deal for Samsung to carry Array’s VideoFlow line of multiprotocol video compression devices. Samsung has been a foundry for Array since 1991.

• Jointly developing products with DSP Group Inc. that will use flash memory to simplify and reduce the cost of digital telephone answering devices. DSP Group will develop a family of DSP chips with a direct interface to a new 4M flash memory (AudioFlash) designed by Samsung for voice storage applications. The first chips are expected to hit volume production in 1Q96.

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• Reached a deal with NEC under which NEC is supplying Samsung with up to 25,000 4M DRAM wafers made by NEC Semiconductors U.K. Samsung assembles the ICs at its back- end plant in Portugal and provides them to European PC makers. The deal will probably be expanded to the 16M level in the future.

• Extended its 1992 flash memory alliance with Toshiba for joint development of 64M NAND flash memories utilizing 0.4µm CMOS technology. Sample shipments will begin in the spring of 1996.

• Joined up with Aspec Technology to develop a line of gate array and embedded array products using Aspec’s 0.6µm HDA technology. The agreement is an extension of a joint product development agreement made by the companies in 1994.

• Licensed Rambus’ proprietary high-bandwidth (500MHz) DRAM interface technology. Samsung expects to introduce its first Rambus DRAM (RDRAM) in 1996.

Samsung — Product Briefs

• Claimed to have fabricated the first fully functional 256M DRAM. The company says sample shipments of the devices will begin in 1997 or 1998. Samsung also claimed to be the first to ship engineering samples of a 4M BiCMOS SRAM operating at speeds as fast as 10ns.

• Added a 32M version to its family of NAND flash memories. The chip is based on a 0.5µm CMOS process and operates from a single 3.3V power source. The company plans to introduce a 5V version to be compatible with its existing 16M devices and a compatible 3.3V 64M product in 1996.

• Entered the multimedia market by introducing a three-piece chipset for digital video applications. The chip contains a digitizer, an encoder, and a decoder. In addition, the company introduced a single-chip audio IC for multimedia products, music synthesizers, and video games.

• Samsung plans to introduce 50 new MCU products by the end of 1997. The company plans to begin shipments of 16- and 32-bit MCUs in 1996.

LG Semicon — Key Agreements

• Licensed Advanced RISC Machines’ ARM7 microprocessor core technology. The company will merge the ARM7 into its ASIC library for use in PDA, communications, set-top box, and high-end consumer chip applications.

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• Announced it signed a deal with Compass Design Automation Inc. (San Jose, California) for development of ASIC libraries using 0.35µm process technology. LG successfully developed 0.8-, 0.6-, and 0.5µm libraries with Compass previously.

• Took a minority stake in flash memory developer SanDisk Corporation, marking LG’s first step into flash memory. LG intends to manufacture SanDisk’s 16M and 32M flash memories using 0.5µm CMOS process technology. LG has also said it plans to produce 64M flash chips and eventually 256M devices.

Hyundai — Wafer Fab Announcements

• Building its next 200mm wafer fab in Eugene, Oregon. The new $1.3 billion plant, called E- 4, will process 16M and 64M DRAMs. The first of three phases, E-4 will have the capacity to run 7,500 wafers per week at 0.35µm geometries. Operations are scheduled to begin in 1997. However, the fab may face delays to meet environmental guidelines brought on by an envi- ronmentalist group that is campaigning to keep Hyundai from building in the area.

Hyundai — Key Agreements

• Agreed with Fujitsu to jointly develop 64M DRAMs. They have had a cooperative relationship through the OEM supply of 4M and 16M DRAMs since 1993.

Hyundai — Product Briefs

• Planned to introduce two 64K x 18 synchronous SRAMs, one with interleaved pipeline and the other with linear pipeline scheme, by the end of 1995, followed by its first generation 32K x 32 burst pipeline part in 1Q96.

• Announced a 50ns version of its 256K x 16 fast-page-mode DRAM that is targeted at graphics memory applications, emerging set-top boxes, and networking products that require wide-word configurations.

• Expects to roll out its first flash memory products by the second half of 1996. The memories are based on a single-voltage, NOR-type architecture and will initially be available in 4M and 16M densities.

• Began sampling in April 1995, a single-chip MPEG-2 device based on an embedded MicroSparc RISC-core processor licensed from Sun Microsystems Inc.

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Taiwanese IC Vendors

In the matter of only a few years, several Taiwanese companies have grown to become significant players in the worldwide IC industry. Overall, Taiwanese companies increased their IC sales by 55 percent in 1995, up from 50 percent the previous year (Figure 2-29).

1995/1994 1995 1995 PERCENT RANK COMPANY 1994 (EST) CHANGE 1 TSMC 740 1,000 35 2 UMC 586 920 57 3 Winbond 326 688 111 4 TI-Acer 314 556 77 5 Mosel-Vitelic 304 465 53 6 Macronix 221 334 51 7 Hualon 108 125 16 8 Acer Labs* 70 90 29 9 Holtek 70 85 21 Others 161 242 50 Total 2,900 4,505 55 *Fabless Supplier Source: ICE, "Status 1996" 17717K

Figure 2-29. Taiwanese Companies’ IC Sales ($M)

A good portion of Taiwan’s IC industry consists of foundry services. The country’s largest IC firm, TSMC, is entirely dedicated to foundry work, while UMC and Winbond, the second and third largest firms, have dedicated more space and funding to increase their foundry capabilities.

Aside from foundry work, IC production in Taiwan is largely focused on lower-margin products such as PC chipsets, EPROMs, ROMs, and SRAMs. However, with backing from a pro-technology government and through partnerships with foreign IC firms, the Taiwanese are shifting their product mixes to more advanced devices like DRAMs, MPUs, flash memories, multimedia ICs, and communications ICs. Although the DRAM is expected to become Taiwan’s industry driver, it is not expected to dominate as it does in Korea.

Taiwanese Vendor Highlights

TSMC — Wafer Fab Announcements

• Expected to begin building a $1.5 billion fab in the U.S., possibly in Oregon, in 1996. With the help of at least one partner, the plant will go into production of 200mm wafers in late 1997 or early 1998.

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• Broke ground on its second 200mm wafer fab in Hsinchu, Taiwan—Fab IV. TSMC expects the submicron facility to cost nearly $800 million and to be completed in 1997 or 1998. Meanwhile, the company moved up to November 1995 the ground-breaking date for Fab V.

TSMC — Key Agreements

• Teamed up with Compass Design Automation to simplify the ASIC design process. Under the agreement, Compass will verify TSMC’s foundry process and characterize physical libraries to ensure first-time silicon success.

• Negotiating a deal with Rambus Inc. under which Rambus will make its high-speed DRAM interface technology available to chip vendors that use the foundry services of TSMC.

UMC — Key Agreements

• Announced plans for several independent foundries it will build with various partners. Alliance Semiconductor and S3 are UMC’s major partners in the first fab, due to open in 3Q96. Partners in the second foundry venture, due to come on line in late 1997, include Trident Microsystems, ATI Technologies, ISSI, and Opti. For the third fab, which is scheduled to begin production in 1997, UMC’s partners include Lattice Semiconductor and Oak Technology. Most recently, UMC announced a joint foundry fab with Cirrus Logic, Xilinx, and prior-partner Alliance Semiconductor that will also commence production in 1997. Each fab will have the capacity to produce 6,250 200mm wafers per week.

• Granted the right by Alliance Semiconductor to license and manufacture certain Alliance DRAM products in return for manufacturing capacity.

UMC — Product Briefs

• Introduced a new 3.3V, 1M synchronous burst SRAM. The chip operates at speeds as fast as 8ns.

• Developing 1M and 2M flash memories which the company expects to begin shipping in mid-1996. The chips are designed around the AMD-type single-voltage architecture.

• Became the first vendor outside of IBM and Motorola to offer a chipset for the PowerPC microprocessor. UMC’s new UM8810 chipset is a three-chip solution for the PowerPC 603, 603e, and 604 processors. UMC also introduced a three-chip chipset for Pentium-class systems.

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• Introduced a line of 50MHz and 66MHz 486DX2-clone microprocessors in 1994 that UMC claimed provided up to 30 percent more performance than comparable Intel chips. However, legal action from Intel on top of limited success in the business are said to have caused UMC to exit the x86 market.

Winbond — Key Agreements

• Negotiating with Toshiba to license the Japanese company’s 16M and 64M DRAM technologies. As part of the agreement, Toshiba is expected to use Winbond as a foundry for a portion of its DRAM capacity. The DRAMs would be manufactured in Winbond’s Fab 3 facility, which is under construction and will be completed in 1997. Additionally, Winbond will likely gain the right to market the DRAMs under its own logo.

Winbond — Product Briefs

• Introduced its latest embedded controller based on the PA-RISC architecture licensed from Hewlett-Packard. The W89K-LC is aimed at video conferencing and set-top box applications and is available in 66MHz and 80MHz versions.

• Began sampling the first members of a flash memory family of products based on proprietary EEPROM technology. The first pair of 5V-only memories are available in 256K and 1M densities.

Winbond — Other Noteworthy News

• Purchased the remaining shares of its chipset affiliate, Symphony Laboratories, based in Santa Clara. The move was made in order to pour more resources into the operation and accelerate the development of its chipsets and other IC lines. Under the agreement, Symphony will now operate as an R&D group under the new name of Winbond Systems Laboratory.

TI-Acer — Wafer Fab Announcements

• Started construction of its second fab facility in Taiwan. Volume production at the $1.35 billion plant is scheduled to begin in 1998. It will have the capacity to manufacture about 10,000 200mm wafers per week and will initially produce 16M DRAMs, moving to 64M DRAMs at a later date.

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Mosel-Vitelic — Wafer Fab Announcements

• Broke ground in October 1995 on a new 200mm fab facility in Hsinchu City. The plant will be equipped to manufacture DRAMs, VRAMs, and SRAMs, with geometries beginning at 0.35µm. Production is scheduled to begin in July 1997 with a potential wafer capacity of 6,250 starts per week.

Mosel-Vitelic — Key Agreements

• Licensed Oki’s 0.45µm CMOS process in return for licensing and royalty fees. Mosel-Vitelic currently uses Oki’s 0.55µm and 0.6µm processes for the production of its high-speed DRAMs.

Mosel-Vitelic — Product Briefs

• Began shipping a 2M EDO (extended data out) DRAM for use in high-speed, low-cost PC graphics applications. The roll-out follows an announcement that the company will offer the EDO feature for all its specialty memory parts with access times under 50ns.

Macronix International — Product Briefs

• Entered the Fast Ethernet LAN chip market with the introduction of the first in a family of Fast Ethernet hub controller ICs. The first chip is a 100Base-TX/FX repeater-controller chip, designed to support eight twisted-pair or fiber ports. A transceiver IC will be brought to market in January 1996.

• Began production of its 16M flash memory ICs, which were codeveloped with Japan’s NKK Corporation. Macronix planned to introduce a 64M ROM and a 32M flash memory in 1995.

Hualon — Wafer Fab Announcements

• Plans to start building a new semiconductor production facility (front-end and back-end) in Malaysia at the site of a sister company in the near future.

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Singaporean IC Vendors

The semiconductor industry is an increasingly important part of Singapore’s electronics infrastructure. Assembly, packaging, and testing remain the primary activities of semiconductor manufacturing in Singapore, but investment in front-end device fabrication is rising substantially. Singapore wants to duplicate the success of Taiwan’s semiconductor industry, but it may have a difficult time because of its smaller source of land and people.

Figure 2-30 shows sales for Singapore’s few IC companies in 1995. Like Taiwan’s TSMC, Chartered Semiconductor Manufacturing is having success at focusing all its efforts on providing advanced silicon foundry services to other IC companies. TriTech Microelectronics, a designer and supplier of ICs for the communications and consumer markets, was split off from Chartered Semiconductor in 1990. TECH Semiconductor is a joint venture between Texas Instruments, Canon, Hewlett-Packard, and the local government.

1995 1995/1994 Company 1994 (EST) Percent Change TECH Semiconductor 330 620 88 Chartered Semiconductor 160 250 56 TriTech Microelectronics* 57 75 32 Total 547 945 73 *Fabless Supplier Source: ICE, "Status 1996" 18959C

Figure 2-30. Singaporean Companies’ IC Sales ($M)

Singaporean Vendor Highlights

TECH Semiconductor — Wafer Fab Announcements

• Broke ground in 1H95 on its third 200mm wafer fab that will produce 16M and 64M DRAMs. Initial production at the 0.35µm facility, which will be capable of running 6,250 wafers per week, is scheduled to begin in late 1996. TECH’s fourth 200mm fab is expected to come on- line in 1998.

Chartered Semiconductor — Wafer Fab Announcements

• Began construction of its third fabrication facility, which is scheduled to open in 1997. Located next to the company’s new Fab II, Fab III will be capable of producing about 8,000 200mm wafers per week. It will also be capable of migrating to 0.18µm design rules.

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Chartered Semiconductor — Key Agreements

• Has made several agreements with other companies that have involved investments in its new Fab II facility (opened in 4Q95) in exchange for guaranteed portions of the wafer output. In February 1994, Actel and Brooktree each invested $10 million in the project, and Rockwell $30 million. In February 1995, Alliance Semiconductor invested $10 million to obtain a stake in the facility. In March 1995, LSI Logic obtained access to Chartered’s fab capacity with a $20 million investment. In April 1995, Standard Microsystems said it would invest $20 million, and in May 1995, Analog Devices announced it would make a similar investment, bringing the total equity investment in the plant to over $100 million.

• Cooperated with Simtek Corporation on the development of Simtek’s first two members of its 256K nonvolatile SRAM family of products. The chips use Chartered’s 0.8µm CMOS process technology in conjunction with Simtek’s 0.8µm SNOS technology. Chartered will support Simtek in volume production.

SEMICONDUCTOR CAPITAL SPENDING TRENDS

Overview

Attempting to keep up with the world’s seemingly insatiable demand for semiconductors, many device manufacturers, especially those in Japan, continually bumped up their 1995 investment budgets during the year. In fact, some companies reported that they were moving up expansions planned for 1996 into 1995. The result can be seen in Figure 2-31. Total semiconductor capital spending in 1995 is estimated to have increased a staggering 68 percent! That is by far the highest growth rate in the past decade. Moreover, the $38.2 billion expenditure outlay is nearly two- and-a half times the level displayed only two years earlier in 1993!

Roughly 95 percent of the spending targeted the manufacture of ICs, while only five percent was spent for discrete devices. As shown in Figure 2-32, 80 percent of capital expenditures go toward equipment purchases and 20 percent toward plant structures.

Fueled by continuing capacity shortages, foundries are a major source of today’s spending boom. Figure 2-33 lists several foundry-dedicated operations that are being set up around the globe. Note that the majority of these fab sites are located in the Asia-Pacific region.

The 1995 worldwide top ten spenders are ranked in Figure 2-34. For the fifth year in a row Intel was the largest spender in the semiconductor industry. Samsung has risen quickly in the ranks after first appearing in the top ten list in 1991. The Korean company spent nearly as much in 1995 as Motorola, the second largest spender. Although no European company made the top ten list, Siemens’ capital expenditures increased by 160 percent in 1995, making it the eleventh largest spender.

INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-65 Worldwide IC Vendors

50,000 49,500

45,000 30%

40,000 38,220

35,000

30,000 68%

25,000 22,805

Millions of Dollars 20,000 48% 15,385 15,000 12,645 -10% 35% 11,375 10,000

5,000

0 1991 1992 1993 1994 1995 1996 (EST) (FCST) Year Source: ICE, "Status 1996" 19246D

Figure 2-31. Worldwide Merchant Semiconductor Capital Spending Trends

Other* Assembly 5% 6%

Building and Improvements Test 20% 17%

Equipment 80%

Wafer Processing 52%

* Computers, automation, etc. Source: ICE, "Status 1996" 20459

Figure 2-32. Breakdown of Semiconductor Capital Expenditures

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Start of Company Location Production Advanced Semiconductor Shanghai, China 1996 Manufacturing Corp. Asian Semiconductor Hsinchu, Taiwan 1996 Manufacturing Co. Chartered Semiconductor Singapore 1997 Manufacturing Co. GMT Microelectronics Valley Forge, Pennsylvania 1996 Interconnect Technology Sarawak, Malaysia 1997 Huajing Electronics Wuxi, China 1996 Lien Hsing Integrated Hsinchu, Taiwan 1996 Circuits Co. Mid-West Microelectronics Lee's Summit, Missouri 1996 Submicron Technology Bangkok, Thailand 1997 Tower Semiconductor Migdal Haemek, Israel 1998 Taiwan Semiconductor Hsinchu, Taiwan 1997 Manufacturing Co. Taiwan Semiconductor Hsinchu, Taiwan 1998 Manufacturing Co. Taiwan Semiconductor unspecified U.S. location 1998 Manufacturing Co. United Microelectronics Hsinchu, Taiwan 1997 Corp. United Microelectronics Hsinchu, Taiwan 1997 Corp. United Silicon Hsinchu, Taiwan 1997

Source: ICE, "Status 1996" 20460

Figure 2-33. Foundries Are Popping Up Everywhere

1995 Capital 1995/1994 Rank Company Headquarters Spending Percent Location ($M, EST) Change

1 Intel U.S. 3,500 46 2 Motorola U.S. 2,300 40 3 Samsung Korea 2,200 69 4 NEC Japan 2,010 80 5 LG Semicon Korea 2,000 567 6 Hitachi Japan 1,755 57 7 Toshiba Japan 1,545 66 8 Fujitsu Japan 1,505 66 9 TI U.S. 1,250 47 10 Mitsubishi Japan 1,120 62 – Total 19,185 71 94´ = $1.00 Source: ICE, "Status 1996" 19820B

Figure 2-34. Worldwide Top Ten 1995 Semiconductor Capital Spenders

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Figure 2-35 shows the annual capital spending levels by world region from 1991 to 1995. Although North America has increased its spending the least in the last two years, it continues to be the largest spender. Note that 1995 marks the first year in which ROW companies (excluding those in Korea) spent more than European companies. At the rate things are going, combined expenditures by Korean and other ROW companies could match that of Japanese companies and North American companies within the next couple of years.

NORTH AMERICA JAPAN 11,905 EUROPE 14,000 13,130 12,000 3,500 3,310

12,000 10,000 3,000 10,000 9,020 2,500 46% 8,000 7,345 62% 2,040 8,000 6,280 2,000 62% 6,400 6,000 4,925 6,000 41% 1,500 1,385 4,295 3,925 49% 1,160 47% 3,520 4,000 Ð38% 1,000 19% 4,000 49% 25% 1,000 16% Millions of Dollars Millions of Dollars 22% Millions of Dollars 2,000 2,000 500

0 0 0 1991 1992 1993 1994 1995 1991 1992 1993 1994 1995 1991 1992 1993 1994 1995 Year (EST) Year (EST)Year (EST)

KOREA ROW 6,000 5,000 5,375 4,500 5,000 4,000 121% 4,000 128% 3,000 3,000 2,360 2,040 2,000 2,000 1,660 1,195 42% 1,015 Millions of Dollars Millions of Dollars 1,060 785 39% 1,000 800 1,000 13% 27% 100% 2% 0 0 1991 1992 1993 1994 1995 1991 1992 1993 1994 1995 Year (EST)Year (EST) Source: ICE, "Status 1996" 17875J

Figure 2-35. Capital Spending by Region

Figure 2-36 shows how dramatically the regional share of spending has changed since 1991. As shown, Japanese companies were once responsible for more than half of the semiconductor industry’s capital expenditures. That was before Japan’s economy collapsed in 1992, causing the Japanese producers to slash their budgets substantially. In the years since, Japan has seen its share of the world’s capital spending shrink to less than one third, despite healthy investment increases in 1995.

Leading North American Spenders

Figure 2-37 lists the biggest North American spenders in 1995. Spending by the North Americans increased 46 percent in 1995, with Intel, Motorola, and Texas Instruments accounting for more than half of the expenditures.

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ROW Companies European 6% ROW Companies European Companies 9% Companies 12% 8% Korean Korean Companies Companies 14% North 8% American 1991 Japanese 1995 Companies North $12.6B Companies $38.2B 34% American 50% Japanese Companies Companies 28% 31%

Source: ICE, "Status 1996" 19819B

Figure 2-36. Capital Spending Make-Up

1995/1994 1995 1995 Company 1994 Percent Rank (EST) Change 1 Intel 3,500 2,400 46 2 Motorola 2,300 1,640 40 3 TI 1,250 850 47 4 IBM Microelectronics 1,000 650 54 5 Micron 855 325 163 6 AMD 700 583 20 7 National 420 298 41 8 IDT 280 60 367 9 Rockwell 210 180 17 10 Atmel 200 183 9 11 AT&T 195 185 5 12 LSI Logic 190 167 14 13 Cypress 180 112 61 14 Analog Devices 170 100 70 15 Zilog 130 69 88 Others 1,550 1,218 27 Total 13,130 9,020 46 Source: ICE, "Status 1996" 14538N

Figure 2-37. North American Merchant Semiconductor-Related Capital Expenditures ($)

To maintain its lead in the rapidly changing and increasingly competitive microprocessor market, Intel has invested heavily in new plants and equipment over the past few years. In fact, combined capital expenditures in 1994 and 1995 represent about half of what Intel has spent on capital additions since its founding in 1968. The company continues to increase capacity for its Pentium processor and prepare for future capacity needs for its sixth-generation Pentium Pro (P6) MPU, which entered volume production in late 1995.

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Motorola has been relentlessly expanding its existing fabs, building new ones, and acquiring the fabs of other firms. Since December of 1993, Motorola has purchased three fab facilities from other semiconductor companies: Western Digital’s fab in California, Harris Semiconductor’s fab in North Carolina, and Digital Equipment Corporation’s plant in Scotland.

Early in 1995 its was estimated that IBM Microelectronics would spend about $600 million during the year expanding its semiconductor production operations. However, by mid-1995 its spending plans had been revised upward significantly. Its current fab projects include: the expansion and upgrade for 64M DRAM production at the joint venture fab it shares with Siemens and Toshiba in Essonnes, France; the upgrade of its Burlington, Vermont, fab to 0.35µm and 0.25µm process capabilities; the expansion of Micrus, its joint venture fab with Cirrus Logic in New York; and the construction of a new $1.2 billion 64M DRAM plant in Manassas, Virginia, with Toshiba.

Micron’s high increase in capital expenditures for 1995 is due primarily to the substantial conversion of the process lines in its existing fabs from 150mm wafers to 200mm wafers. In addition, construction of its new $1.3 billion Utah manufacturing complex started in August 1995.

IDT’s capital expenditures were substantially higher in 1995 than in 1994 because of the cost associated with putting up its first 200mm wafer fab. Located in Oregon, the facility is scheduled to begin operations in 1Q96.

Look for Cirrus Logic to make the North American top ten list in 1996 as the company makes a major effort to increase its ownership of manufacturing capacity. Formerly the world’s largest fabless company, Cirrus Logic has said it will invest approximately $2 billion by the year 2000 to build up its manufacturing capability through both fab ownership and foundry relationships. Upon completing its expansion plan, the company expects 60 to 70 percent of its wafer requirements to be met by owned sources and the balance met by its foundry partners. The first elements of Cirrus Logic’s expansion program are summarized in Figure 2-38.

Leading Japanese Spenders

Figure 2-39 provides estimates for 1995 semiconductor capital spending by several of Japan’s largest semiconductor producers. Overall, 1995 spending levels in the country were 62 percent higher than in 1994 in terms of dollars, or 49 percent in terms of yen.

Challenged by the Korean and Taiwanese DRAM manufacturers, many of the Japanese producers are adding capacity primarily for the ramp-up of 16M DRAM production and to prepare for 64M DRAM demand. For example, NEC has accelerated the construction of a new 16M and 64M DRAM fab in Hiroshima, now scheduled to start production in May 1996. Meanwhile, Hitachi is building a 64M DRAM production in Nakakoma and Mitsubishi is preparing to begin the construction of a new 64M DRAM-dedicated fab at its Saijo site in 1996. Matsushita is building in

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Tonami to expand its capacity not only for DRAMs, but also for microcontrollers and advanced ASICs. Spending by Sharp and Sanyo are focused on boosting flash memory capacity in Fukuyama and Niigata, respectively.

•Micrus: Further expansion of this joint venture with IBM is estimated to require approximately $195 million over a 12-to-18 month period. IBM has an option to assume up to half of this investment. A major portion of the total investment will be used to purchase state-of-the-art capital equipment that will expand capacity and support the migration to next-generation 0.35- micron process technology. •AT&T: Slated to begin production in early 1997, this new joint venture will operate within an existing AT&T wafer fabrication facility in Orlando, Florida, and be owned 60 percent by AT&T and 40 percent by Cirrus Logic. AT&T will provide facilities, improvements, equipment, working capital and process technology developed by Bell Labs to the new venture. Cirrus Logic will provide equipment, working capital, and certain advance payments for a total commitment of $420 million. The companies will equally share the production output of the newly added capacity, which will focus on 0.35- and 0.25-micron processing of 200mm wafers. •UMC: Under a foundry venture agreement, a new company, United Silicon, Inc., will be formed at an estimated cost of up to $1 billion. Approximately half of this cost will be funded through equity investments made by UMC, Cirrus Logic, and two other U.S. semiconductor companies. Cirrus Logic's investment will total $90 million, of which 25% will be paid immediately, with the balance following over an 18-month period. The new fab will begin production in 1997. •TSMC: Cirrus Logic will expand its current relationship with TSMC to include a long-term purchase agreement. This agreement, which was expected to be completed by the end of 1995, will require Cirrus Logic to lend approximately $120 million to TSMC over a three-year period. Source: Cirrus Logic/ICE, "Status 1996" 20461

Figure 2-38. Cirrus Logic’s Manufacturing Expansion Program

1995 1995 1995/1994 Company 1994 Rank (EST) Percent Change

1 NEC 2,010 1,115 80 2 Hitachi 1,755 1,115 57 3 Toshiba 1,545 930 66 4 Fujitsu 1,505 905 66 5 Mitsubishi 1,120 690 62

6 Matsushita 965 520 86

7 Sanyo 615 365 68

8 Sony 475 390 22

9 Oki 395 240 65

10 Sharp 385 340 13

11 Rohm 310 190 63

12 Seiko Epson 310 175 77

13 Nippon Steel 110 75 47

Other 405 295 37 Total 11,905 7,345 62 1994: 102¥ = $1.00 1995: 94´ = $1.00 Source: ICE, "Status 1996" 19098D

Figure 2-39. Japanese Semiconductor-Related Capital Expenditures ($M)

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Due in large part to the high value of the yen, Japanese companies have in recent years placed greater emphasis on spending abroad. NEC is adding a new $800 million 16M and 64M DRAM fab to its Scotland site and expects to begin building another fab in the U.S. starting sometime in the second half of 1996. Hitachi is working on two fab projects in Texas, the expansion of its existing fab in Irving and the construction of a new joint DRAM manufacturing facility in Richardson with TI. Fujitsu announced major expansions of its fab facilities in Oregon and the United Kingdom, each costing at least $1 billion, while Mitsubishi decided to enable its DRAM assembly and test facility in Germany to manufacture 16M DRAMs, microcontrollers, ASICs.

The most significant offshore announcement came from Toshiba, who has until now stuck by its strategy to focus its IC production in Japan. The announcement of intentions to establish its first overseas wafer fab came in April 1995. A few months later, the company made its official announcement; it had agreed to join Motorola in constructing a $1.2 billion 64M DRAM plant in Manassas, Virginia.

Leading Korean Spenders

The Koreans continue to invest heavily in semiconductor plant and equipment (Figure 2-40). The main Korean IC companies, Samsung, LG Semicon (formerly Goldstar Electron), and Hyundai, boosted their semiconductor capital spending levels by 136 percent in 1995. This is an indication of the country’s commitment to the IC industry and how quickly it has become a global force.

1995/1994 1995 1995 Company 1994 Percent Rank (EST) Change

1 Samsung 2,200 1,300 69 2 LG Semicon 2,000 300 567 3 Hyundai 1,000 600 67 Others 175 160 9 Total 5,375 2,360 128

Source: ICE, "Status 1996" 13859N

Figure 2-40. Korean Semiconductor-Related Capital Expenditures ($M)

Almost all of the spending in Korea is going toward the ramp-up of 16M DRAM production and the preparation for next-generation DRAM demand. The fabs going up in Korea are massive, some with weekly 200mm wafer capacities of 10,000 units. It has been rumored that some future Korean lines will process as much as 12,500 wafers per week.

Furthermore, the Koreas are making a move to establish overseas facilities. Hyundai and Samsung have announced plans to build large DRAM factories in Oregon and Texas, respectively. Samsung has set a long-term goal to produce more than half of its products in foreign facilities.

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Leading ROW Spenders (Excluding the Koreans)

Taiwanese semiconductor companies are the big spenders in the ROW region, outside of Korea (Figure 2-41). In fact, the Taiwanese plan to spend some $15 billion on new wafer fabs by 1997. Much of the spending will go for building foundry-dedicated facilities and DRAM plants. TSMC broke ground in Hsinchu City on the foundry’s second and third 200mm fabs in 1995. Using funds from a host of fabless and fabbed capacity seekers, UMC is building several 200mm wafer foundries in Hsinchu. Meanwhile, Vanguard, TI-Acer, Mosel-Vitelic, and new companies Powerchip and Nanya Technology are all building massive DRAM fabs.

1995/1994 1995 1995 Company 1994 Percent Rank (EST) Change

1 TI-Acer 595 330 80 2 TSMC 550 400 38 3 UMC 480 152 216 4 Mosel-Vitelic 430 100 330 5 HMC 400 80 400 6 Vanguard 270 — N/A 7 Winbond 155 130 19 8 Macronix 120 42 186 9 Holtek 25 10 150 Others 75 51 47 Total 3,100 1,295 139

Source: ICE, "Status 1996" 19549C

Figure 2-41. Taiwanese Semiconductor-Related Capital Expenditures ($M)

Other firms located in the Asia-Pacific region are also making heavy investments in semiconductor production. For example, Chartered Semiconductor of Singapore, a foundry-dedicated company, recently began construction of its third major plant. Chartered has plans to build three additional fabs by the end of 2000, pushing the country’s plan to have up to 30 fabs operating on the city-state island within a decade a bit closer to reality. TECH Semiconductor, Singapore’s other major IC manufacturer, also plans to build three additional fabs by the end of 2000.

In the coming years, look for semiconductor expenditures in China to grow substantially as the country grows to become a significant semiconductor producer. New fabs are also sprouting up in countries like Malaysia and Thailand.

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Leading European Spenders

European semiconductor capital expenditures grew 62 percent in 1995 (Figure 2-42). Europe’s three largest semiconductor suppliers—SGS-Thomson, Philips, and Siemens—increased their share of total semiconductor capital spending in Europe to more than 80 percent in 1995. Together the three spent an estimated $2.66 billion in 1995, up 77 percent over 1994.

1995/1994 1995 1995 Company 1994 Percent Rank (EST) Change

1 Siemens 1,060 407 160 2 SGS-Thomson 850 780 9 3 Philips 750 320 134 4 Temic 190 170 12 5 GEC Plessey 80 55 45 6 Ericsson 55 50 10 7 Alcatel Mietec 25 24 4 8 AMS 24 26 –8 Others 276 208 32 Total 3,310 2,040 62

Source: ICE, "Status 1996" 12143Q

Figure 2-42. European Semiconductor-Related Capital Expenditures ($M)

The majority of Siemens’ spending in 1995 was for the completion of a new $1.5 billion 64M DRAM fab in Dresden, Germany, which came on-line in late 1995. Additional spending was for production expansions at its existing fabs in Villach, Austria, and Regensburg, Germany, as well as for the start of construction on a new $1.8 billion fab facility in Newcastle, United Kingdom.

SGS-Thomson’s investments are focused on adding capacity primarily for microprocessors, flash memories, and BiCMOS chips. In early 1996, the company will begin building its fourth 200mm fab in Rousset, France, at the site of an existing 125mm wafer plant.

Philips is in the process of upgrading its IC plant in Caen, France, and one in Nijmegen, The Netherlands. The Nijmegen upgrade will allow for the production of 0.5µm and 0.35µm ICs on 200mm wafers. Philips is also busy converting its fab facility in Shanghai, China, into a foundry- dedicated operation modeled after TSMC (of which Philips owns 25 percent) and jointly owned with Northern Telecom and several Chinese interests. The new operation, called Advanced Semiconductor Manufacturing Corp. (ASMC), will be capable of processing circuits with 0.8µm geometries on 150mm wafers.

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Future Capacity Trends

In all, 60 new fab facilities or major expansions underwent construction in 1995. Of those, 19 were in North America, 12 in Japan, 11 in Europe, and 18 in other parts of the world. ICE has record of 28 more fabs that are scheduled to undergo construction in 1996 with a regional distribution similar to that in 1995.

Figures 2-43 and 2-44 provide a look at the industry’s capital expenditures as a percent of semiconductor production from 1979 to 1995, as well as a forecast for 1996. As shown, spending in 1995 as a percentage of production was at its highest level since 1985! If spending and market increases occur as forecast, the spending percentage figure will reach a record level in 1996.

Worldwide Worldwide Capital Spending Year Semiconductor Capital Spending (Percent Production ($B) ($B) Of Production)

1996 (FCST) 177.2 49.5 27.9 1995 (EST) 148.1 38.2 25.8 1994 104.6 22.8 21.8 1993 79.8 15.4 19.3 1992 62.3 11.4 18.3 1991 58.5 12.6 21.5 1990 57.5 12.0 20.9 1989 55.0 11.6 21.1 1988 50.5 9.4 18.6 1987 36.7 5.9 16.1 1986 29.6 4.8 16.2 1985 23.7 6.3 26.5 1984 28.1 7.7 27.4 1983 18.3 4.1 22.4 1982 14.4 2.8 19.4 1981 14.3 2.9 20.3 1980 13.8 2.6 18.8 1979 10.9 2.0 18.3

Source: ICE, "Status 1996" 14532M

Figure 2-43. Trends in Semiconductor Capital Spending as a Percent of Production

The high spending level in 1995 may cause some concern about overcapacity. Although ICE believes spending in 1995 was uncomfortably high when expressed as a percent of production, it is not believed to indicate “severe” problems to come for the industry. Instead, it is believed the high rate of expansion will allow supply to catch up with demand by 1997.

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27.9 28 27.4 27 26.5 26 25.8 25 24 23 22.4 22 21.5 21.8 ’79-’95 21 21.1 Average 20.3

Percentage 20.9 20 19.3 19 19.4 18.8 18.6 18 18.3 18.3 17 16 16.2 16.1 15 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 Year (EST) (FCST) Source: ICE, "Status 1996" 14537R

Figure 2-44. Worldwide Capital Spending as a Percent of Worldwide Semiconductor Production (1979-1996)

Overall, it appears that the majority of semiconductor companies’ spending plans are “reac- tionary” to market trends. Thus, when the market is booming, spending will surge. However, when demand slows, most companies will put expansion plans on hold until business picks up.

In hopes of providing some insight into the condition of capacity utilization in the IC industry, a number of the world’s major IC makers joined together in February 1995 to develop a statistical program to report capacity and utilization data twice a year. As of June 1995, the Semiconductor International Capacity Statistics (SICAS) program was supported by 46 IC manufacturers from the U.S. (14 members), Japan (14), Korea (3), Europe (9), and Taiwan (6).

SICAS members supply IC manufacturing capacity and utilization data, which is then subdivided into MOS and bipolar technologies. MOS data is further subdivided into linewidths above and below 0.7µm.

Information from the SICAS report can be found in Figures 2-45 and 2-46. An estimated 61 million 150mm-equivalent wafers were produced in 1995, representing over 95 percent of total IC factory capacity. That translates into a total available wafer production capacity of about 64 million 150mm-equivalent wafers in 1995, up 14 percent from 1994.

The production of 150mm-equivalent wafers at 0.7µm and smaller geometries surged during the first half of 1995 compared to the 2H94 production level. However, the capacity utilization rate dropped from 97 percent to 95.8 percent. For wafers with 0.7µm and larger geometries, total wafer

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starts declined in 1H95 compared to 2H94, while capacity utilization increased from 95.9 percent to 97.2 percent. Bipolar/BiCMOS wafer starts and capacity utilization both increased slightly during 1H95 compared to 2H94.

1,400 = MOS <0.7µm = MOS ≥0.7µm = Bipolar/BiCMOS

1,224 1,200 1,111 1,042 26% 1,000 18% 14%

800

600 67% 56% 64%

400

200

18%

Thousands of 150mm-Equivalent Wafer Starts Per Week 19% 18% 0 1H94 2H94 1H95

Source: SICAS/ICE, "Status 1996" 20454

Figure 2-45. IC Wafer Capacity According to SICAS

Capacity Utilization* (Percent) Wafer Type 1H94 2H94 1H95

MOS <0.7µm 96.3 97.0 95.8

MOS ≥0.7µm 95.7 95.9 97.2

Bipolar/BiCMOS 86.7 88.2 90.9

Total 94.0 94.7 95.7 * Figures expressed are for 150mm equivalent wafers. Source: SICAS/ICE, "Status 1996" 20354A

Figure 2-46. Wafer Production Capacity Utilization According to SICAS

Data such as that provided by SICAS is important in helping the IC industry to maintain somewhat of a balance between supply and demand. However, with the inevitable market fluctuations and the lagtime between spending and the start of production, a perfect balance may not be achiev- able. Still, under “ideal” conditions, ICE believes that the semiconductor industry needs to keep its capital expenditure level at about 20 to 21 percent of sales.

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The most likely capacity scenario for the semiconductor industry through the year 2000 is one of brief periods of relatively minor shortages and surpluses. These periods will be most noticeable in specific leading-edge product segments such as DRAMs and advanced MPUs.

STARTUPS

Despite the increasingly competitive nature of the semiconductor industry, startup companies continue to emerge. Development programs cost more, require more time, and are much more risky. As a result, many technology advances require the financial resources of huge semiconductor companies. Nevertheless, many innovations are still brought forth from small, entrepre- neurial ventures.

Anymore, startups in the U.S. rarely begin operations with a new fab. Looking back on the for- mative years of the semiconductor industry (the 1960’s), most firms included funding for a production facility as part of the capital needed to initiate business. In most cases, a wafer fab was a mandatory part of being in the IC business. With few exceptions, this thought process continued throughout the 1970’s and early 1980’s. Figure 2-47 lists the few firms that have started operations with a fab in recent years. It should be noted that three of the four companies in the figure (GMT, Micrus, and Mid-West) operate fabs that were already in existence.

Company Location Products Processes Start Up Comments Date

GMT Microelectronics Valley Forge, PA ASICs, CMOS, 1996 A group of investors led by GMT management foundry BiCMOS purchased the facility formerly owned by Commodore. The operation offers 1-, 2-, and 3-micron double-level metal CMOS, 1-, 2-, and 3-micron BiCMOS, and active-matrix LCD process capabilities. Micrus Hopewell DRAMs, CMOS 1994 Joint manufacturing venture between IBM Junction, NY logic ICs and Cirrus Logic. MiCRUS fabricates DRAMs for IBM and logic ICs for Cirrus in one of IBM's plants in New York. Mid-West Lee's Summit, Foundry CMOS 1996 Former AT&T fab. Mid-West Micro intends to Microelectronics MO upgrade the facility to make memory and microprocessor-related chips. Twinstar Richardson, TX 16M and 64M CMOS 1996 A joint venture of Texas Instruments and Semiconductor Inc. DRAMs Hitachi. The company will produce DRAMs for the partners at a $500 million, 200mm wafer plant under construction in Texas. Initial production of 16M DRAMs is expected to begin in the summer of 1996.

Source: ICE, "Status 1996" 20236A

Figure 2-47. Sampling of North American Startups With Fabrication Facilities

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Production costs increased as process geometries shrank and the financial burden associated with fab ownership became too great for many startup companies. Thus, going the fabless route and using foundry capacity became the most common method for startup companies to get their products to market. Figure 2-48 lists a number of fabless companies that have recently started operations in the U.S. One interesting fact to note about the companies in the figure is, about half of them are involved in graphics and /or multimedia-related chips. Another interesting fact is that they are all located in Silicon Valley.

START COMPANY LOCATION PRODUCTS PROCESS UP COMMENTS DATE

Aptos Semiconductor Santa Clara, CA FIFOs, PROMs, and CMOS 1994 Founded by former Cypress vice president. Will Inc. fast SRAMs second-source memory chips until design of its own ICs can be started. Chromatic Research, Mountain View, CA Multimedia processor CMOS 1993 Developed its Mpact Media engine and software that Inc. and software processes video, 2D and 3D graphics, audio, fax/modem, telephony, and video conferencing on a single chip. Corsair Microsystems San Jose, CA High-performance CMOS 1994 Will produce MCMs based on fast SRAMs from various Inc. cache-memory partners. subsystems DynaLogic Corp. Sunnyvale, CA FPGAs CMOS 1993 Targeting very high-speed FPGA market. Galileo Technology San Jose, CA FIFOs and core logic CMOS 1993 Introduced what it claims to be one of the largest Inc. chips synchronous SRAM-based FIFOs (32-bits wide) NeoMagic Corp. Santa Clara, CA Graphics controller CMOS 1993 Its single-chip graphics controller integrates an SVGA for mobil PCs accelerator, local-bus interface, RAMDAC, LCD controller, and nearly 1M of frame-buffer memory. nVidea Inc. Sunnyvale, CA Multimedia chips CMOS Its ICs combine graphics, video, and 3D-rendering capabilities. Sensory Circuits, Inc. San Jose, CA Speech-recognition CMOS 1994 Supplier of low-cost speech-recognition ICs that are chips based on neural network technology. The company uses TSMC and Chartered for the production of the chips. Silicon Magic Corp. Cupertino, CA High-performance CMOS 1994 The company's charter is to find a place as a supplier of EDO DRAMs high-performance embedded memory solutions in graphics and multimedia applications. Synema Corp. Palo Alto, CA Graphics controller CMOS 1993 High-performance graphics for personal computers. chip 3Dfx Interactive, Inc. Mountain View, CA 3D graphics CMOS 1994 The company's first product is scheduled to make its accelerator debut in coin-operated arcade games in 1Q96.

Source: ICE, "Status 1996" 12995V

Figure 2-48. Sampling of Recent North American Fabless Startups

ICE is not aware of any new Japanese IC manufacturers that have started operations in the past couple of years. Most startups in Japan in the past were the result of the country’s large automo- bile, steel, and chemical manufacturers and other conglomerates seeking to diversify their businesses to include semiconductor production.

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Figure 2-49 shows a few of Europe’s recent startups. Two of the three companies in the figure (SMST and Wesson) operate what were once IBM-owned and operated fabs.

Company Location Products Process Fab Start Comments

SubMicron Semiconductor Boeblingen, DRAMs, logic ICs CMOS 1994 A joint venture of IBM and Philips to manufacture Technologies GmbH (SMST) Germany chips at the former IBM-owned fab. Initially, the company is manufacturing 4M DRAMs for IBM and 0.8-micron logic ICs for Philips. Wesson France Corbeil-Essones, Telecommunications Bipolar 1995 The fab was purchased from IBM by Wesson France devices France SA, a new company representing a group of Hong Kong investors. The plant will process 1.0-micron bipolar chips primarily for Asian telecom markets. Zentrum Mikroelektronik Dresden, ASICs, DRAMs, SRAMs, CMOS, BiCMOS 1993 Emerged as a private company in 1993. Dresden GmbH (ZMD) Germany MCUs, DSPs, Foundry

Source: ICE, "Status 1996" 18545F

Figure 2-49. Recent European Startups With Fabrication Facilities

Recent startups in the Asia-Pacific region have been located primarily in Taiwan. Taiwan’s semiconductor industry continues to pump large sums of money into its fab facilities. Figure 2-50 provides a sampling of recent IC startup firms in the Asia-Pacific region.

SEMICONDUCTOR CONSORTIUMS

Increasingly, survival in the fast-paced semiconductor industry is dependent not only on how well a company competes, but also on how well it creates new technologies to maintain its competitive edge. Some of the technological prowess, whether in design or in manufacturing, originates in the facilities of consortiums around the world who, in turn, pass along their findings to member/con- tributing companies or to regional companies or to the industry in general.

Provided below is an overview of activities and highlights at several semiconductor consortiums around the world.

North American Consortiums

Sematech

Established in 1987 to improve U.S. competitiveness in the semiconductor industry, Sematech now consists of 11 major U.S. semiconductor manufacturers, each of whom contributes an equal amount to match the funding the consortium receives from the government. The consortium has spent over $1.2 billion in government and industry funds since its founding.

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Company Location Products Process Fab Start Comments

Advanced Semiconductor Shanghai, China Foundry CMOS, BiCMOS 1996 Originally established by Philips in 1991, the fab is being Manufacturing Corp. of converted into a foundry operation jointly owned by Philips, Shanghai (ASMC) Northern Telecom, and several Chinese parties. Asian Semiconductor Hsinchu, Taiwan Foundry CMOS 1996 Building a 200mm wafer fab with a production capacity of 3,750 Manufacturing Co., Ltd. wafers per week. Interconnect Technology Sarawak, Foundry CMOS 1997 Malaysia's first front-end wafer fabrication facility. Malaysia Lien Hsing Integrated Hsinchu, Taiwan Memories, graphics CMOS 1996 Located at UMC's manufacturing complex, this company is Circuits Co. chips, foundry jointly owned by UMC (50%), Alliance Semiconductor (20%), S3 Inc. (20%), and local investors (10%). Nanya Technology Corp. Taipei, Taiwan DRAMs CMOS 1996 The Formosa Plastics subsidiary plans to begin processing 1,250 200mm wafers/week by July 1996 in a new fab it's building. Powerchip Semiconductor Hsinchu, Taiwan 16M and 64M DRAMs, CMOS 1996 Joint venture between Mitsubishi and Taiwan's UMAX group, a Corp. logic ICs scanner maker that took over Elitegroup, Taiwan's second largest mother board manufacturer. Mass production of 200mm wafers is expected to begin in 4Q96. Full capacity is expected to reach 5,000 wafers/week. Shougang NEC Beijing, China MCUs, linear ICs CMOS, Bipolar 1993 NEC Corp. (40%) and Shougang Corp. (60%) joint venture. 150mm wafers and 1.2-3.0µm feature sizes. Sintek Hong Kong SRAMs, ASICs 1993 Sintek plans to offer a standard-cell ASIC design service for ICs with embededded SRAM and ROM. Submicron Technology Bangkok, Foundry CMOS, BiCMOS 1996 Alphatec, traditionally a contract chip assembler, is building an Thailand $800 million wafer fab in Bangkok. Plans call for 6,000 200mm wafers per week capacity. Syntek Taiwan 4-bit, 16-bit MCUs, other CMOS 1994 28,500 sq. ft. fab completed in 1994. Will use 1.2µm CMOS domestic appliance ICs technology on 150mm wafers with 3,750 wafers/week capacity. Tatung Co. Taiwan 16M and 64M DRAMs CMOS 1996/1997 One of Taiwan's largest consumer electronics businesses, Tatung, will enter the DRAM market with an unnamed joint venture partner. The company began building a fab facility in 1995. TECH Semiconductor Singapore 4M and 16M DRAMs CMOS 1993 Joint venture between TI, HP, Canon, and Singapore Economic Singapore Ltd. Development Board. Producing 200mm wafers. Vanguard International Hsinchu, Taiwan 4M and 16M DRAMs CMOS 1995 Purchased from the Taiwanese government by a consortium of Semiconductor Corp. (VISC) companies including TSMC and Winbond. The consortium plans to build a second fab by 1996, at a total cost of $1-1.45 billion

Source: ICE, "Status 1996" 18544H

Figure 2-50. Recent Asia-Pacific Startups With Fabrication Facilities

Annual funding of Sematech by the U.S. government has been declining in recent years, but it is supposed to last through 1996 (Figure 2-51). However, a statement by the House-Senate confer- ence committee in September 1995 recommended that the consortium receive $39 million in 1996 instead of the full $89 million Sematech had anticipated. If 1996 funding is cut, Sematech will accelerate its planned downsizing, which includes a reduction in its headcount by about 200 and cut in the number of active research projects from 100 to about 60 or 70. Beginning in 1997 Sematech’s budget will be entirely funded by private financing.

There have been many successes at Sematech including increased equipment reliability, improved software, and the development of standards for equipment safety, cleanliness, and integration. Its fab has become a lab for advancing new technology and passing that on to member companies (member companies are those who are mostly involved with high-volume, multi-product IC manufacturing).

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300

250

200

150

Millions of Dollars 100

0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 (FCST) (FCST) Year Source: Solid State Technology/ICE, "Status 1996" 20462

Figure 2-51. Sematech’s Shrinking Budget

Listed below are some of the key events at Sematech announced in 1995.

• Approved plans to create a new organization devoted to the development of 300mm wafer fabrication capability. The International 300mm Wafer Initiative will receive $120 million in funding through 1998. It will be located at Sematech in Austin, Texas, and will lease facilities to test and qualify 300mm wafer process tool sets. The new consortium is open to non- Sematech members, as well as foreign chip producers who have wafer fabs in the U.S. Several foreign companies have indicated they will join, with the exception of those in Japan, many of which have said they will join a Japanese 300mm wafer program instead.

• Plans to establish a new program called “Virtual Bank” that will permit corporations, including non-Sematech members, to help fund the consortium’s semiconductor infrastructure research after 1996. The first area of focus under the plan will be lithography issues for 0.18µm-generation devices.

• Although AT&T Microelectronics reserved the option to withdraw from Sematech by the end of 1995, the company has said that it will continue its membership in the organization.

• Launched a major effort to bring EDA up to speed with the semiconductor industry’s aggressive deep-submicron road map. Sematech hopes to research and develop the software needed to enable more efficient 0.25µm design by 1998.

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Semiconductor Research Corporation (SRC)

The SRC was formed in 1982 by the Semiconductor Industry Association to strengthen and maintain the vitality of the North American semiconductor industry. It is a non-profit organization that plans and implements an integrated program of basic research conducted by faculty and gradu- ate students at leading universities in the U.S. and Canada.

More than 60 companies fund research in five major areas: manufacturing systems, manufacturing processes, design, microstructure, and packaging. The $28 million budget includes $10 million for the university research program at Sematech. Research at SRC accounts for more than half of all silicon-related research conducted at U.S. universities.

The Fabless Semiconductor Association (FSA)

A group of 40 companies (including Actel, Cyrix, and Sierra Semiconductor) formed the Fabless Semiconductor Association in 3Q94. The group cooperates with IC producers that have fabs on forecasting capacity and process technology trends.

It is not surprising that IC foundry companies like TSMC and Chartered Semiconductor are working with FSA. With fabless IC companies representing an increasing share of total IC sales in North America each year, the timing of the creation of the FSA seems appropriate.

Strategic Microelectronics Consortium (SMC)

Canada’s Strategic Microelectronics Consortium (SMC) is seeking to help the nation’s semiconductor industry achieve its objective of $1 billion in sales by the year 2000. It has been estimated that semiconductor sales in Canada reached about $450 million in 1994.

The consortium is funded 50 percent by its members and 50 percent by the Canadian government. Several key projects for 1995 include the development of image resizing DSP devices, the achievement of very low power signal generation and clock recovery at data rates exceeding two gigabytes per second, and work in asynchronous transfer mode (ATM), radio frequency (RF), and ferroelectric structure technologies.

Japanese Consortiums

Semiconductor Industry Research Institute Japan (SIRIJ)

The Semiconductor Industry Research Institute Japan, based in Tokyo, was established in 1994 by ten leading Japanese semiconductor makers: Fujitsu, Hitachi, Matsushita, Mitsubishi, NEC, Oki, Sanyo, Sharp, Sony, and Toshiba. The institute is serving as an independent organization, main-

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taining cooperative relations with the semiconductor industry, the government, and academia. It will focus on research concerning the development and promotion of semiconductor technology, world environment problems, international cooperation, and technology exchange. SIRIJ is working to put together two separate programs to develop 300mm and 400mm wafer technology.

Super Advanced Electronics Technology

The Super Advanced Electronics Technology project is a long-term, government-funded project to develop the basic technologies required for future process generations. It will focus on such lithography issues as synchrotron-generated X-ray lithography, plasma etching, and mask production.

European Consortiums

Intra-university Microelectronics Center (IMEC)

IMEC, a consortium based in Belgium, has become one of the most influential research organizations in the region and is committed to the design, production, and testing of ICs. It is a major contributor to both Europe’s ESPRIT and JESSI projects.

Major 1995 research projects for IMEC included the development of 0.25µm CMOS technologies, the development of VLSI methodologies for real-time data processing, the development of new ASIC design tools for use in commercial products, and the research of optical lithography technology for processes in the 0.35µm to 0.25µm range.

Other projects underway focus on such technologies as ultraclean processing, silicides and inter- connects, software development, compound semiconductor processing, materials processes, packaging, and microsystems.

Joint European Submicron Silicon Initiative (JESSI)

JESSI is Europe’s largest collaborative semiconductor project. Its goal is to develop tools and technology by sharing R&D resources, which will position Europe as a significant player in various aspects of the worldwide semiconductor market. Since its founding in 1990, JESSI has had to overcome numerous cultural and financial hurdles in order to survive.

Over the years there have been many critics of JESSI, saying that it has too many companies, too many projects, and too many people, all of which results in too few tangible benefits. Today, however, the project has a better image following its successes in developing such things as chipsets for GSM digital cellular and ATM data communications equipment, digital audio broadcast technology, the first open framework in the world for CAD tools, a less expensive 0.7µm CMOS process, a 0.5µm CMOS process, and flexible wafer fabs using minienvironments.

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Although the JESSI project is supposed to end in 1996, a follow-on project named Microelectronics Development for European Applications (MEDEA) is being put together. Work under the MEDEA could begin as early as mid-1996. Funding is expected to be about the same as for JESSI, but fewer companies will be involved and there will be fewer projects. MEDEA will likely be more market-driven than the technology-driven JESSI.

Listed below are some of the key events at JESSI announced in 1995.

• JESSI is developing sub-half micron processes that make use of optical lithography, thereby delaying the high capital equipment and associated costs connected with e-beam and X-ray lithography. At the 0.25µm level, JESSI is working on two processes, one employing deep- UV lithography with excimer lasers and the other i-line steppers with phase-shift masking. Deep UV with phase-shift techniques will be used for a 0.18µm process that employs optical lithography by the end of 1996. Specifications for a 0.12µm process, also based on optical lithography, are expected to be laid out beginning in 1996.

• Soitec (Grenoble, France), a maker of silicon-on-insulator (SOI) wafers, is working with JESSI to develop standard 200mm SOI wafers for advanced CMOS applications. The project will be based on 200mm wafers produced by Wacker-Chemitronic and a low-dose Simox (sepa- ration by implanted oxygen) process prepared by Soitec.

Open Microprocessor Systems Initiative (OMI)

OMI was launched in 1992 as part of the European Union’s ESPRIT program. OMI membership is open to all organizations carrying out R&D in Europe, including foreign companies with R&D facilities in Europe. Motorola, IBM, Apple Computer, and Sun Microsystems are among the non- European members of OMI. The list of European members includes Advanced RISC Machines (ARM), SGS-Thomson, GEC Plessey, University of Edinburgh, Matra Hachette Multimedia Systems (France), Gemplus (France), Syndesis (Greece), Etnoteam (Italy), and IMEC (Belgium). In all, there are more than 400 companies, universities, and research establishments working on more than 40 projects under OMI.

OMI’s original mission was to challenge U.S. dominance of the European MPU market by providing European manufacturers easy access to current and future generations of microsystems architecture. This would be accomplished not by developing new microprocessor technology but by forming a technical bridge between European and non-European technology.

In mid-1995, OMI began exploring the possibility of international collaboration with other coop- eratives. Members of OMI met in the U.S. with members of the Microelectronics and Computer Technology Corporation (MCC) consortium, Austin, Texas, in part to explore ideas on forming an international semiconductor consortium.

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ROW Consortiums

Taiwan Submicron Consortium

The Taiwan Submicron Consortium operates under the leadership of Taiwan’s Electronics Research and Service Organization (ERSO) and the Industrial Technology Research Institute (ITRI) and is supported by both the local semiconductor industry and the Taiwanese government.

The consortium’s Submicron Process Technology Development Project was instituted in 1990 with the goal of establishing Taiwan as a major force in the global semiconductor and electronics industries. This project has played a major role in developing the country’s first 200mm wafer fab and achieving 0.7µm process technology, which was transferred to UMC and TSMC. The consortium has also developed 0.5µm 16M DRAM and 4M SRAM technologies, which are to be provided to local IC manufacturers by 1996.

Early in 1994, ERSO began searching for investors to spin off its R&D fab facility, with process technology and research personnel to be included. In July 1994, it was announced that the 200mm wafer fab would be acquired by a 10-member consortium, led by TSMC. The consortium turned the fab operation into an independent commercial DRAM company—Vanguard International Semiconductor Corporation (VISC).

In 1995, the Taiwan Submicron Consortium started a new program called the DEEP Submicron Joint Development Project, which is geared at uniting local IC manufacturers, research organizations, and equipment suppliers to develop 0.25µm process technology.

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